Today we had the first notable tax policy announcement in the lead-up to the 14 October General Election.  Although, today’s announcement did not appear planned.  Prime Minister, Chris Hipkins, was seemingly backed into a corner after poor polling and ruled out any capital gains taxes or wealth taxes under his leadership, repeating the same step taken by the former Labour leader and Prime Minister Jacinda Ardern.

The announcement that there would be no capital gains or wealth tax under his leadership was not particularly surprising as this is a political reality that Labour leaders have been forced to swallow for decades. The big surprise today was that the Prime Minister was reported as saying that plans had been underway to introduce capital gains tax and wealth taxes in the 2023 budget as part of a “tax swap”, but he put an end to that. A tax swap is where one tax is introduced or raised so that another tax can be lowered or removed.  Presumably, the plan would have been to use capital gains and wealth tax revenue to fund tax cuts in the lower-income tax brackets.

Admitting that plans were underway to introduce wealth and capital gains taxes is a strange and brave admission.  The admission that Labour had taken steps to introduce policies under an unelected Prime Minister that had been ruled out by the previously elected Prime Minister is not a particularly good look.   Although, technically, this would not have been a broken promise as Jacinda Ardern had promised that capital gains and wealth taxes would not be introduced under her leadership.  No doubt, the opposition will have plenty to say about this in the coming months.

The Green Party had already announced their tax manifesto several weeks ago, but that was not exactly newsworthy given the Green Party’s extremely poor track record of implementing policy.  The Greens are campaigning to introduce a wealth tax, amongst other things.  Today’s announcement effectively renders Green’s tax policy dead.