Cherrypicking can begin from Sir Michael’s report

JACINDA Ardern and Grant Robertson have got exactly the kind of tax report they needed from Sir Michael Cullen.

Most tax reviews — and for that matter all manner of reviews commissioned by the Government — tend to come with a plea from their authors that their recommendations be seen as whole and not be cherrypicked.

Sir Michael on the other hand, has delivered an entire cherry tree and invited the competing forces within Labour, New Zealand First and the Greens to inspect and to pluck only the part they agree with.

Such are their differences, it is quite possible that when the Government’s final position is revealed in April, that the only new tax on which they all agree is a capital gains tax on residential investment property.

That would be a greatly diluted result from the comprehensive broadbased capital gains tax on shareholders, farms and other businesses preferred by the Greens, and Labour in its election policy.

But Sir Michael ’s report canvassed a very limited capital gains tax as a possibility, giving the Government cover it may need to avoid looking disunified.

It would may be seen as a failure by the Green Party and Labour leftists.

Disregarding the pros and cons of a capital gains tax, even a limited version would be an extraordinary political achievement for Ms Ardern and Mr Robertson.

It is already quite an achievement politically that a Labour Party that could not sell a 15% capital gains tax at the 2011 and 2014 elections now stands a reasonable chance of imposing an even bigger one at 33% on residential investment property.

But even a cutdown version of a capital gains tax would be a dangerous weapon in the hands of National.

Owning a second home as a retirement nest egg or a seaside bach has long been regarded as an acceptable, even admirable, aspiration for Kiwis.

It would not be hard to convince those with such an aspiration, or those who have already achieved it, that they are being punished by a Government addicted to new taxes. Portraying it as an attack on aspiration is a powerful argument.

National claims to have identified eight new suggested ones in the Tax Working Group Report.

When Labour first included a capital gains tax in its policy, it frequently lumped smalltime investors who held properties for a long time with what they called ‘‘greedy’’ speculators driving up Auckland house prices. It stopped doing that.

Labour is reduced to one big argument — the principle of taxing income the same, no matter what the source. That is an argument about fairness.

It may turn out to be a battle royal for voters next election but that will depend on the battle within the Government in the next two months.