In this installation of the Policy Comparison series (which will be added to every day until the election itself) I’ll look at the various Tax Policies of Labour and National. Tax is usually a big issue for voters so I felt that it deserved a post separate to the Economic Policy post.
As an aside, I was recently asked “Why only National vs Labour?”, well the answer to that is clear: John Key or Phil Goff will be Prime Minister and it’s also quicker this way, so without further delay:
Tax Policies Overview:
Labour has put forward an ambitious and attention grabbing Tax Policy which John Armstrong has labelled ‘future thinking’ with many of the proposals ‘inevitable’. So what’s the problem? The removal of GST on fruit and vegetables is an attractive election bribe and raising tax on the rich to pay for it should appeal to much of Labour’s core vote, so why is Labour continently hovering at 28-30% in the polls?
The answer to this is trustworthiness. Labour has had a hard time persuading voters that their policies will come to fruition. They’re behind in the polls and the widespread view is that Labour can promise things which they are unlikely to carry out.
In addition, the Capital Gains tax has not been sold well to the public and has been a big stumbling block for Goff.
The last consideration to make on this the dates that Labour has given. Most of their tax policy will only have an impact over multiple parliamentary terms and therefore a short-term fixated public is unlikely to be swayed by their proposals one way or another.
- Labour proposes the removal of GST from fresh fruit and vegetables
- The introduction of a capital gains tax which will be set at a flat rate of 15% with no indexation for inflation
- Changing the tax system to raise the the top rate for incomes over $150,000 to 39% and make the first $5000 of all income tax-free