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Barry Soper: Tax bracket debate offers Jacinda Ardern CGT distraction

Author
Barry Soper,
Section
Opinion,
Publish Date
Wednesday, 24 April 2019, 6:28AM
Prime Minister Jacinda Ardern. Photo / File.
Prime Minister Jacinda Ardern. Photo / File.

COMMENT

It's just a week ago that a stern-faced Jacinda Ardern walked purposefully towards the podium in the theatrette, in the bowels of the Beehive, where so many important announcements have been made, not the least Winston Peters' appointment of her as Prime Minister just over 18 months ago.

For her this was the painful part of politics, not being able to do what you told the electorate you were so determined to do - introduce a Capital Gains Tax to inject more equity into the system. It will now never happen under her leadership she insisted, before striding out and taking the elevator to the solitude of her ninth-floor office.

She's gone silent ever since, handing the Tuesday morning media interviews over to her buddy Grant Robertson. Even though she may have suffered a personal body blow, the back-down isn't going to do Labour all that much harm if you listen to the opinion polls.

But Labour would now desperately like to move the narrative along. We're being told Ardern's at the forefront of the international push to get offensive content, like the Christchurch gunman's massacre, off the Internet. Good luck with that one. Even though we're told she's at the forefront of the push, there's no indication of who she's being pushed by and how she plans to achieve something that would seem impossible to control.

The gunman's rampage is still accessible on some sites.

And just when Labour's spin machine thought it was changing gear, Simon Bridges' spinners were doing their best to move it back into tax arena, with a plan to tag to inflation the brackets, which govern how much tax you pay.

The point the National leader makes is fair, within the next three years those on the average wage will move into the top tax bracket, that's pegged at $70,000 a year, which if you earn more than that sucks a third of your earnings into the Government's coffers. It's called fiscal drag, where when the brackets aren't adjusted we all get dragged into the highest tax rate.

The brackets haven't been changed in more than a decade and with the average wage currently at just on $66,000 a year, the top tax rate is beckoning.

If the politicians are serious about a more equitable system, they would take the bull by the horns and introduce another bracket and raise the income level where it kicks in. Like across the ditch, their top tax rate's 47 per cent once an income exceeds $188,000 a year, which is similar to the system in the United Kingdom.

For Labour, it would, of course, be less risky waving the red matador's cape at that particular bull than it would be for National who would be gored by their support base.

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