Henry Cooke

Winning an election while promising a tax hike is extremely hard. Luckily for Labour, the Tax Working Group’s proposed capital gains tax would actually result in a tax cut for most Kiwis. The group calculates almost all the burden would fall on the top fifth of households – who hold 76 per cent of the taxable assets – and we could all get an income tax cut with the revenue made.

It’s good for the Government that this tax fight is being held now, far more than a year ahead of the next election. By the time the ballot boxes appear, there will be plenty of other issues to fight about.

National has also made the mistake of overreaching in their initial reaction. There are plenty of good reasons to oppose a capital gains tax but calling it an ‘‘attack on the Kiwi way of life’’ risks alienating everyone for whom owning multiple properties is not a remotely conceivable way of life.

If you are an older Kiwi making good money, it may seem like everyone and their dog owns multiple investment properties, but most of us don’t. Most of us work for a living and pay the taxes due.

Unfortunately for Grant Robertson, the real fight isn’t taking place in public, it’s taking place around the Cabinet table. NZ First leader Winston Peters is keeping his powder dry in public right now, but his long-held opposition to a capital gains tax hasn’t changed.

NZ First MPs admit anonymously they have no real interest in a new tax that could hurt farmers and small businesses, and that is perceived to hurt retirees.

Peters could be moved by serious public pressure. But right now since the Government is simply ‘‘considering’’ the proposal, Labour can’t unleash Jacinda Ardern – the country’s most popular politician – to fight its corner.

Perhaps having one of the least popular politicians in the country fighting the opposite point of view will help.

Instead, Labour has to show Peters that a bold change in taxation is electorally feasible – especially as he faces pressure on climate change legislation at the same time.

The TVNZ/Colmar Brunton poll from Thursday gives us an idea of how the public feels. Once you pair the capital gains tax with a personal income tax cut, 46 per cent are for it while 41 per cent are against it.

But most of these people are already Labour and Green supporters – people aged over 70 were significantly more likely to oppose the CGT than the rest of the country.

There is a path forward for some version of the working group proposal. Even the dissenters conceded there was some argument for taxing just investment properties’ capital gain.

But that fight would still not be easy. New taxes never are. Plenty of Kiwis who don’t own multiple properties have designs on doing so one day, via inheritance or leveraging a loan on their own home.

The ones who already do are extremely well represented in the media, and they vote. It might not be the Kiwi way of life, but it sure is the Kiwi dream. NZ First may not be bold enough to puncture that.

Labour has to show Peters that a bold change in taxation is electorally feasible.