Prime Minister Chris Hipkins has ruled out implementing a capital gains or wealth tax after the election in any Labour-led government.
In a statement released alongside various documents relating to Budget 2023, Hipkins revealed officials were working on a potential wealth or capital gains tax that could offset an income tax cut.
However, he nixed the idea in a captain’s call.
“While work was already underway on a potential wealth tax and CGT as part of a tax switch in the Budget I ultimately made the call not to proceed with it. We simply didn’t have a mandate to implement those tax changes,” he said in a press release.
The Prime Minister is currently in Lithuania for a NATO summit.
Hipkins said the Labour party would draw a line under speculation about tax policy and rule out both a wealth tax and capital gains tax.
“I’m confirming today that under a Government I lead there will be no wealth or capital gains tax after the election. End of story,” he said.
Coalition scrap
This will come as a disappointment to necessary coalition partners, the Green Party, which has pitched a guaranteed minimum income and tax cuts funded by a wealth tax.
James Shaw, the party’s co-leader, said in a statement that this was not a decision Hipkins had the authority to make.
“Political leaders don’t get to decide what will and won’t happen after the election. That’s the job of the New Zealand public,” he said.
Governments had been “tinkering at the edges” and refusing to tax the wealthy for too long.
“If political leaders are not willing to take those decisions on behalf of the people of the country you purport to lead, then why be in politics at all,” he asked.
Shaw claimed a majority of New Zealanders supported a wealth tax, and the Green Party would argue for one in coalition negotiations. He didn’t say it was a bottom line, however.
No big shake-up
Hipkins said it was not the right time for a big shake-up of the tax systems, when many Kiwi households were struggling to get by.
“New Zealanders I talk to want certainty and continuity right now, and that’s what I’m delivering with this policy”.
A Labour government would be focused on the basics and not on “experimenting with a wealth tax”.
Hipkins also hit out at National’s promises of tax cuts, which he claimed were unaffordable and inflationary.
“Some people might call it boring, but the times call for restraint and simple and smart policies which grow our economy, help drive inflation down and provide targeted help to those families who need it the most” .
Further details of Labour tax policy are yet to come, but big changes have now been ruled out.
Nicola Willis, the National Pary’s finance spokesperson, said she’d been warning for months the Government had been designing a new set of taxes.
“Earlier this year they took a wealth tax plan all the way to Cabinet. This would have put a wrecking ball through our fragile economy,” she said in a tweet.
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