New Zealand · Politics

National Party Accuses Labour of Risky Tax Plans Amidst Own 'No New Taxes' Pledge

New Zealand's National Party has intensified its criticism of Labour's fiscal strategy, alleging plans for new taxes to increase government revenue, while maintaining its own commitment to 'no new taxes'.

News AutomationCompiled 05:07 UTC · 1 min read

A view of the New Zealand Parliament building, the Beehive.

1 sources

Pipeline ingest

3 reads

Positive / Neutral / Negative

1 countries

Related coverage

Prime Minister Christopher Luxon (left) was in his happy place this week. Photo / Pool

THE FACTS

National ramped up attacks on Labour’s fiscal strategy this week, claiming it planned to implement several new taxes to lift spending to Labour’s stated 33% of GDP.
To date, Labour’s main sources of new revenue come from its capital gains tax, cancelling the Investment Boost tax credit.
The party has not yet made a decision on whether to reinstate a ban on interest deductions for residential landlords.

Parliament descended into farce this week as National backbencher after National backbencher got to their feet to probe ministers on the likelihood of them introducing various cruel and unusual taxes.

Questions directed to Nicola Willis were particularly ridiculous.

On Tuesday, Nancy Lu asked Willis about theGovernment’s fiscal strategy, and whether she had considered lifting revenue to 33% of gross domestic product (GDP) – a level of taxation which, by remarkable coincidence, Labour had announced it would target just days before.

While Parliament’s rules prevented Willis from talking about Labour’s policy, they can’t stop her from waxing lyrical about a world in which the Government just happened to adopt a fiscal strategy which just happened to be the same as Labour’s, which, in Willis’ telling, would have disastrous consequences for households, lifting their tax bills by $100 a week.

Make a beeline for the Beehive

Get weekly politics headlines with commentary from our political experts straight to your inbox.

Please email me competitions, offers and other updates. You can stop these at any time.

Email address

By signing up for this newsletter, you agree to NZME’s Terms of Use and Privacy Policy.

The next day, another backbencher, Katie Nimon, asked Willis whether she stood by the answers she’d given to Lu the day before.

Willis, unsurprisingly, answered in the affirmative, giving Nimon licence to probe further.

Despite Willis being very clear she’d never hike taxes to 33% of GDP, Nimon asked, just out of interest, really, what sort of crazy things a dangerous tax-addicted Government, whose tax plan again bore a striking resemblance to Labour’s, might try if it did want to reach that level of taxation.

Well, seeing as Nimon asked so nicely, Willis couldn’t help but reply with a litany of nasty taxes, including hikes to income tax rates – which Labour is very much not campaigning on – as well as a capital gains tax, interest deduction ban and Investment Boost cancellation which bear an unusual resemblance to things Labour will – or plans to – campaign on.

Labour was furious, leader Chris Hipkins accused Willis of lying about his party’s policy – a breach of Parliament’s rules, which prohibit calling people a liar.

But of course, no one could be lying about Labour’s policy because Parliament wasn’t debating Labour’s policy, it was simply debating the possibility of the Government adopting a policy that bore a striking resemblance to Labour’s policy and why that would be a terrible idea.

On Thursday, National backbenchers had another shot. David MacLeod got to his feet and asked Willis if she stood by the answers she’d given to Nimon – remember, Nimon had asked whether Willis stood by the answer she’d given to Lu.

Willis responded in the affirmative, effectively telling MacLeod that she stood by the answer given to Nimon, which was that she stood by the answer given to Lu.

Which is a very roundabout way of saying that Willis held to the view she’d expressed three days prior that hiking revenue to 33% of GDP would be a terrible idea – a terrible idea which, by some remarkable coincidence, happens to be a policy of her main opponent.

National’s policy, familiar by now to the whole country, is to campaign on “no new taxes”.

Adding to the Alice in Wonderland of it all was the fact that Parliament was in urgency to pass a raft of legislation before the election. During periods of urgency, the dates on the wall of the debating chamber don’t move. Nor are they changed for Hansard. As far as Parliament is concerned, these mad few days were really just one day that never ended.

Napier MP Katie Nimon asked questions of Nicola Willis. Photo / Mark Mitchell

Willis wasn’t the only one getting in on the game.

In recent days:

Paul Goldsmith confirmed to the House that the Government won’t be implementing a streaming levy that looked very similar to the one Labour had in the member’s ballot.
Agriculture Minister Todd McClay confirmed the coalition won’t be implementing a capital gains tax on farms, which Labour isn’t proposing, but which National wants you to think they are.
Revenue Minister Simon Watts confirmed the Government doesn’t plan to hike the corporate tax rate, a policy strikingly similar to that of the Greens.
Housing Minister Chris Bishop confirmed the coalition wouldn’t be implementing a stamp duty which may or may not resemble tax proposed by Te Pāti Māori.

Collectively, this produced the rather amusing spectacle of a Government holding itself to account for the policies of the Opposition.

Ministers got creative answering questions from the Opposition.

Responding to questions from Green MP Lan Pham, Bishop said the Government’s Resource Management Act (RMA) reforms were “the biggest tax cut any Government will deliver in a generation”, a phrase that drew gasps and chuckles.

Bishop’s argument that “every superfluous consent is a tax; every unnecessary notification is a tax; every year of delay is a tax” caused by the RMA is pretty sound, but coming after days of questions on tax, Bishop’s stretch was a little, shall we say, taxing.

Every single patsy question National asked of itself this week related to tax – bar two, which both related to the tax-adjacent issue of rates-capping.

The tactic, though a little desperate (more on that later), clearly worked for the way it moved the topic of political conversation on from the party’s leadership woes, and for the way it rebadged the cost of living – still voters’ main anxiety – into something more friendly to National.

Tax and the cost of living are related but distinct things.

Obviously, hiking taxes makes it difficult to afford stuff, but having high levels of tax doesn’t necessarily equate to a cost-of-living problem.

Many European countries have a high tax burden but are more affordable than, say, New Zealand. Although, of course, if New Zealand did lift its tax burden by not resetting income tax rates after a period of inflation, then people will find it more difficult to afford things.

National will want taxation to be front of mind for voters when they head to the polls.

It will want the election to be a referendum on sustaining relatively low levels of taxation and solving the cost-of-living problem by ensuring people keep more of what they earn. If that is top of mind for people once voting opens, they stand a good chance of winning.

Labour will want voters to be thinking about the cost of living: the fact it’s out of control and that the Government has failed to deliver on its promise to fix it. If this, rather than tax, is top of mind during the voting period, then it’s Labour that probably stands a better chance of leading the next Government.

Labour’s been trying similar tactics to National in the House to make this point.

Each day, Hipkins and finance spokeswoman Barbara Edmonds will attack Luxon and Willis over various price increases.

It’s the mirror image of National’s tactic, equal parts ridiculous and effective – ridiculous because the cost of almost everything goes up over time and provided these increases are small, this is usually a good rather than a bad thing – but effective because the Government was elected on a mandate to slow inflation which it has failed to deliver on. Inflation returned to the target band only to shoot back up again.

For whatever reason, National succeeded this week in having Labour fight on its terms.

It was clearly a panic from National.

The party wet the bed in having a second confidence vote in four months and it expects the polls to eventually show it.

In the panic, it reached for the tried-and-true. National knows how effective these campaigns are.

A scare campaign about what Dame Jacinda Ardern would do, in 2017, with the findings of her tax working group arrested the seemingly unstoppable “Jacindamania”, causing Labour’s polling to find a ceiling and forcing Ardern to promise to take any recommendation from that working group to the 2020 election.

In the end, Ardern didn’t even do that, binning the tax working group’s recommendations wholesale because, for some reason, even when Labour is at its strongest, it’s never been strong enough not to be terrified of tax.

Labour leader Chris Hipkins said he would not increase fuel tax, but has been dogged by questions about whether he would adopt taxes from other parties. Photo / Mark Mitchell

It’s little wonder National has reached for a similar tactic now, and little wonder Labour reacted as it did, having been burnt so many times before – Labour panicked in the face of National’s panic.

It announced it would back-rate capping legislation at first reading, not wanting to give National any room to allege Labour wanted to put up rates. On Thursday, potentially by accident, the party announced it would not go through with all three of next term’s fuel tax hikes, not just the first 12c one.

Hipkins and Willis tumbled through the rhetorical looking glass responding to that particular call. Hipkins, seemingly unaware of the cost of the decision, claimed the whopping $1.8 billion price for the tax cut could be met through a relatively harmless “scaling” of transport investment plans, while Willis bellowed warnings of the “thousands” of jobs at risk through cutting back transport investment.

There’s no easy way out of this particular problem.

The coalition is set to decide what to do with the tax on Monday. It probably can’t afford to delay the hikes for the entire Parliamentary term. Delaying the 12c hike by just a year would cost an eyewatering $600 million – and even then, voters are just as likely to hate a 12c fuel tax hike whether it takes effect in 2027 or 2028 (when a 6c hike is already scheduled).

Hiking the tax completely undermines National’s “no new taxes” or its earlier “no new taxes on working people argument”. In the hierarchy of taxation, fuel taxes are right below income tax and GST as taxes voters get most grumpy about.

Later on Thursday, Labour got a break when revenue spokeswoman Deborah Russell cut in on a line of patsy questions to Revenue Minister Simon Watts, asking him to rule out increasing GST.

Watts should have just said “yes”, but his roundabout, stumbling response, which ended with the phrase “we will not be increasing any new taxes” (emphasis on new), gave Labour all it needed – it rushed out a press release within minutes accusing National of failing to rule out a hike in GST.

Labour wasn’t to know, but Willis had ruled out hiking GST the day before and she quickly did the same again after Labour’s press release.

The week showed both the extent of National’s panic, but also how effective the party can be when it unifies behind a solid attack.

We also saw the fragility of Labour’s position.

While many polls still have the party ahead, the lead is not wide enough for Labour to brush off desperate attacks the way a Government-in-waiting might be able to.

Gift article

Save Share