On Labour’s tax package (and Rupert Murdoch)

There could hardly have been a better set of Dom-Post headlines yesterday – Fruit and Vege Prices Rocket / Healthy Choices Off The Menu As Bill Mounts” – to greet the Labour tax package, which includes its promise to remove GST from those very same essential items of household budgeting. Taken together with the capital gains tax and the restoration of the top 39 cents tax rate (even if only for those earning over $150,000) the package has put John Key’s government on the back foot, and in the unusual position of railing against a policy agenda not of its making.

The results have not been pretty. So far, Key has made a hash of his counter attack, sounding shrill and rattled. (So the capital gains tax commonplace in every other developed country would be ‘a dagger through the heart of growth’ and ‘our tax system is the envy of the world’?? On which planet?) The hyper-ventilating by Key bodes rather well for Labour in the television debates that will dominate the abbreviated season for contemplating political matters this year – which will be slotted in after the Rugby World Cup Final on October 24, with everyone due in the polling booth barely a month later.

For once, the tax package gives Labour a potent set of policies that is consistent with what the party routinely says it stands for, yet so rarely does. Suddenly, Labour appears to be setting the policy debate parameters for this election, a situation that will require Key to project something more substantial than mere likeability. On recent form, that could be a stretch.

The trouble being, the more that National focuses on the Labour package, the more likely it is that the free publicity will inadvertedly generate further recruits for Labour’s position – by amplifying the fairness argument that is the strongest sales point of the CGT to the wider public. (The efficiency argument can be made, but it is more complex.) National will have to change the topic entirely to regain the policy initiative.

To that end, it has been getting no help at all from its Act Party ally. As The Standard has brilliantly pointed out, Don Brash has at one time or other taken every contradictory position possible on a capital gains tax. More often than not, Brash has spoken somewhat positively about it. Not this week, though as political expedience has induced the party of centre-right principle to suddenly conclude that a capital gains tax is really the work of the devil incarnate. True, Goff has not exactly been a stalwart crusader for a capital gains tax down the years, either.

So far, even Labour must be feeling surprised at the generally positive reception (even Gareth Morgan & Fran O’Sullivan have signed up) for the notion of introducing a capital gains tax. Some Labour supporters may baulk at the decision to fix it at only 15%, rather than at the marginal rate – but on RNZ this morning Phil Goff was claiming that this was more or less in line with Australia’s marginal rate levied only on 50 % of the capital gain. For better or worse, the Labour version can hardly be criticised as a massive tax rake-off, in that it will take ten years to crank up to its full billion dollar plus potential.

In the short term framework of this year’s election campaign, National might have done better to damn a CGT with faint praise as having only idealistic and theoretical virtues… you know, as one might expect from its origins as Green Party policy. By taking the path of patronising the idea, National could also then have challenged Labour to use its CGT plan to reduce the income tax burden on the low and middle income wage slaves out there, and bring down corporate tax levels while they’re at it. Too late for that approach now. Suddenly and surprisingly, this election now looks like a real contest, at last.


Rupert On the Ropes

Longevity has its rewards… but how sweet it is that Rupert Murdoch has lived long enough to see the chickens come home to roost. Imagine how galling it would have been if the old tyrant has died last year, before the News of the World phone hacking revelations really began to bite. The collapse of his 100% takeover bid for BSkyB marks a crucial setback for his legacy planning – based on looking two decades out – in which he aimed to cross fertilise his declining print empire with digital content. Good. We will all benefit from Murdoch’s stranglehold on our digital futures being loosened, if not entirely broken.

Also good to see the distance that Britain’s political leaders (led by Labour’s Ed Milliband, with David Cameron following lamely behind ) are now putting between themselves and their media puppetmaster. Meanwhile, Nick Davies of the Guardian (who started all this and kept on following it after everyone else thought the story had run its course) is promising that there is more, much more to come, and this time about the activities of NOTW’s rivals. And to think that, so far, no-one has called it Phonegate. Sorry.


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