Henry Cooke is Stuff’s Chief Political Reporter
OPINION: And we’re back.
Tax Secretary David Parker last week threw New Zealand politics headfirst into the tax debate, despite not actually announcing any tax changes.
Parker instead laid out one of the problems with New Zealand’s tax system – that the government doesn’t really know how much money the super-rich have – and said he gives the tax authority the power to find out.
He also proposed legislation requiring officials to report on the fairness and viability of the tax system as it stands, an attempt he says to move the debate from “opinions and conjectures” to actual facts about existing or proposed taxes could do.
* Now let’s work towards a tax vote in 2023
* Election 2020: Thank god this empty election is almost over
Ironically, this has thrown us right back into the simplest and most aggravating type of debate: the elimination game.
This is a game that both the media and politicians play every time taxes are due. It’s occasionally true in other areas of discussion – particularly retirement savings – but taxes are the main playing field.
Prime Minister Jacinda Ardern was asked to do so on Monday The AM Show whether Parker’s project was really just preparatory work for a wealth tax.
Ardern first confirmed what Parker said in the speech – that Labor would not introduce any more taxes this term.
She was then asked if she would stand by ruling out a capital gains tax – not just during this term but while she was Labor Party leader. She confirmed the promise still stood.
But then she was asked if she could levy some sort of wealth tax while she was chair and she disagreed, saying instead: “You’re asking me to project into the next election and beyond. I will not do that because we have not yet formulated our tax policy for the 2023 election.”
In other words, she refused to rule out a wealth tax. There’s your headline for the story and for quickly produced ACT and National press releases. (ACT came in first, as they often do.)
Since this isn’t Ardern’s first attempt at the elimination game, their opponents can also portray it as a broken promise. In the 2020 election, as Ardern fended off claims that Labor was secretly introducing the Greens’ wealth tax, Ardern appeared to rule out such a tax not only for the 2020-23 term, but during her tenure as Prime Minister.
“Would you quit before introducing a wealth tax?” Ardern was asked during the campaign and replied: “As Prime Minister, I will not allow that.”
Labor could squeeze a rhetoric out of this statement if need be, saying Ardern specifically rules out the Green Party’s wealth tax, not a tax on static value rather than income. She could call it something else, if she wants one. The opposition would treat this mercilessly, running the clip over and over again, calling it a broken promise. Or Ardern could simply rule out a wealth tax again sometime in the next few weeks.
There’s nothing wrong with reporters trying to get very specific answers from politicians, or politicians using those answers for campaigns. This is the lifeblood of democratic politics. But we made the elimination game a bit ridiculous.
This is the fault of both the media and the politicians themselves – and I’m writing this as a reporter who definitely asked a “can you rule out X” question. We’ve expanded the game of exclusion beyond individual political terms to include entire careers. It is reasonable to ask politicians to rule out certain measures in their next term in the middle of an election campaign, especially given that MMP means that measures a party did not fight for could emerge in negotiations. Voters deserve certainty about what a party definitely wants not do, and that gives them that.
It becomes even more absurd when the question is taken to the next level: can the head of state rule out that he will ever implement this policy as prime minister? This requires political leaders to handcuff themselves not only to enacting a policy in the next three years, but also to deciding they like it, campaigning for it at an election, and then closing that election to win.
These questions and promises have their roots in voter cynicism about politics after the 1980s and 1990s, when two governments enacted some radical changes that voters thought weren’t really committed to.
For National, this was very acute in terms of retirement benefits. First Jim Bolger broke a promise to abolish the surcharge on old-age pensions, then his government had to work out a deal with Labor on the controversial issue as the age was slowly raised to 65, and finally Jenny Shipley lowered the actual rate of pension payments – a policy , which probably contributed to Labor’s victory in 1999.
With that experience in mind, it was retirement that made John Key an ironclad disclaimer when he was national leader – he would not increase age while he was leader. After Labor flirted with raising the superannuation age itself, Ardern copied Key and said she too would resign before changing the superannuation age. And halfway through the last term, she added another leg to her “I would resign in place of X” pledge, saying she would step down rather than ever introduce a capital gains tax as leader.
The problem with the elimination game is twofold.
First, it allows all sorts of malicious attacks on policies that parties don’t really track in any meaningful way. In this current debate, National and ACT can say that Labor will go all out on the Greens’ wealth tax, even if the party has no interest in something so radical. As a result, Labor must either play the game of exclusion themselves, or simply receive a series of attacks on the most radical fiscal ideas the other side can dream up.
If Labor goes to the elections in 2023 with some kind of wealth tax, then that should be discussed as to its actual merits and demerits. Voters would have ample time at this point to reflect on what was actually on the table, rather than just contemplating what hasn’t been pre-emptively removed from the menu.
Of course, this can also be reversed. Labor is not above attacking the National and ACT for not excluding various unpopular right-wing political ideas. These are unlikely to hold up as well as taxes, but that won’t stop Labor from trying. Ardern also fell into this trap by playing the elimination game herself with CGT and Superannuation.
The other problem with the exclusionary game is simply that it handcuffs governments too long. Neither party wants to get rid of a popular leader like Key or Ardern. But conditions change over time, and we should not want our politicians to tie themselves with too many ropes.
Policy should occasionally contain new ideas that adapt to new problems, rather than just a growing list of policies that never actually get implemented. There are reasonable reasons for raising the overage and changing our tax system in some way. There are also reasonable reasons for leaving things as they are. These are debates that Kiwis deserve, led by our politics. Instead, we seem doomed to exclude them.