Form a committee, form a committee. That’s the standard answer we now have to any tax issue arising in New Zealand, because that is what this government has stated.
Tax cuts are good. That’s the standard answer we get from National. It’s a resoundingly simple message which in part nearly won them the 2017 election, and remains exceedingly powerful in any election.
We now know that it is hard for this Labour leadership to have the courage of its convictions on tax, because a newly-minted leader with all the momentum in the world simply could not face holding onto her position about implementing Capital Gains taxes in the first term, nor a tax on water, despite making regular and clear statements to do so days earlier.
National continues to win the arguments about tax: they own the field.
They are going through the same arguments in the United States, with a massive tax cut package going through government at the moment.
There’s an instinct that tax cuts must lead to economic growth, because they personally feel so good in their direct benefits. Or at least, the idea of them makes us want to feel good about them. The smell of the coffee is better than drinking it.
But National talks a better game than the left on tax.
In 2017 they framed their tax package around helping the family.
“We are investing $2 billion in our Family Incomes Package, and are especially focused on helping low income families with children and steep housing costs get ahead.
Here are the top 4 takeaways of the Package:
1) Increasing the $14,000 income tax threshold to $22,000, and the $48,000 tax threshold to $52,000.
Anyone earning more than $22,000 will receive a tax reduction of $11 a week, or $572 annually. Anyone making over $52,000 will receive a tax reduction of $20 per week, or $1040 annually.
We are putting more money back into the pocket of hard working Kiwis.
2) Removing the Independent Earner Tax Credit of up to $10 a week.
Anyone who used to claim this credit will still receive the funds. It instead is going to through the increase in tax threshold above.
We are making it easier for lower income families to receive tax reductions back.
3) Lifting the Family Tax Credit rates for young children to those of children aged 16 to 18.
Lower income families could expect their tax credit per child to increase anywhere between, $9 to $27 per week, or $468 to $1404 annually, depending on the age of their child.
Roughly 310,000 families will benefit from this change.
4) Increases Accommodation Supplement rates for a two person household to be $25 and $75 a week, while the maximum rates for larger households will increase between $40 and $80 a week.
Lower income families will be receiving more funding for their housing.
Students who are receiving the allowance could receive additional funds up to $20, per week, as well.
In case anyone missed it, the narrative is family, family, family. Families on lower incomes. If they didn’t get so squemish about the word ‘family’ it could have been written as Labour Party policy.
Can anyone detect a similar narrative from the Labour-led government? I can’t, other than the small-c conservative timidity of Minister Robertson, who fronted for killing the tax policies during the election.
Labour’s wind-back of its tax change implementation need not be a fatal blow to their leadership in tax. But it will be if there is no alternative narrative pretty soon. Strangely, the announcement of the terms and Chair of the independent tax working did not say exactly why this working group was needed. What Minister Robertson provided instead was three context-free abstract nouns: “The main goal here is to create a better, balanced and fairer tax system.”
None of those three words mean anything in politics or indeed to the average New Zealander, when it comes to their interests or their family.
He could give some subtext about why a strong and sophisticated country needs a strong state, which runs on tax.
He could give some idea of what fairness really means in deeply practical and concrete terms, like extra packs of Weetbix, or pints of milk, or loaves of bread, or eggs, on the table per week.
He could even stretch himself to talk about redistributing from the very rich to eradicate poverty, mapping it to the Prime Ministers’ own goals against child poverty.
Or even, even, something like tilting the entire economy towards more productive assets that sustain greater wealth and superior jobs, through tax instruments.
But he didn’t.
At the moment, National can look to the election and show that Labour are weak on tax, that the National-aligned farmer lobby beat them easily, and they are fully ready to orchestrate the real estate lobby against them to beat the landlord-focussed taxes too. National have the narrative, they have the resources, and they have the track record to win on the tax issue.
So what can we do to help this Labour-led government to fight back on tax? The first answer is to show that taxes mean we can have nice things. Things that are so nice and so attractive that we want to have our money pulled out of our bank accounts even before it gets there. You can write your own list.
We remain a major attraction to the world. People adore us. They want to be here, visit here, and settle here. When we leave for a while, most of us come back. We need a tax system that sustains how good we really are as a country. When tax goes down we put that at risk. I would start with that collective “we”, in the sentence “we can have nice things”.
That takes the whole conversation away from scarcity, cost tradeoffs, limit pies of schools versus prisons, and the other arguments that the left always loses.
We need to win the argument on tax, well before the tax working group gets underway.
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