Will tax reform be Labour’s trump card?
Chris Hipkins has more than two years to convince the electorate that the wealthy should pay more tax, singling out a fresh policy on tax reform as a key issue the Labour Party will take to the next general election in its hopes to win back voters.
Hipkins called for a new debate on tax reform, but did not go as far as calling for a wealth or capital gains tax, in his first major speech as Opposition leader in Auckland yesterday.
He ruled out taxing wealthy prior to the general election, under pressure from National and ACT, but said tax reform is “back on the table”.
“Obviously we didn't win the election so that gives us the opportunity to come back and reassess,” Hipkins said.
It comes after the International Monetary Fund (IMF), and former Finance Minister Grant Robertson, called for tax reform within the past week.
Robertson used his valedictory speech ending 16 years in Parliament, to make a final pitch for reform on Wednesday.
“Our current system entrenches inequality,” Robertson said. The IMF on Tuesday outlined the need for a capital gains tax in New Zealand, as well as a land value tax, and changes to corporate income tax to promote investment, boost productivity and generate extra revenue to cope with growing fiscal challenges.
But Finance Minister Nicola Willis made it clear the government had no intention of increasing taxes on anyone, ahead of the May 30 Budget.
“Labour can’t blame this government for the economic mess they left behind. Their only answer to every problem is just more tax,” she said in a statement.
“We are focused on reducing the tax hard working people pay and that will come through in our Budget.”
Willis repeatedly attacked Labour’s handling of economic issues to devastating effect for Labour, who suffered an historic election defeat as a result.
Hipkins has for the past months been working on Labour’s priorities and strategy with MPs, at the time conceding the party had been “sent a message” by the result.
Willis repeatedly pushed the Labour government, and officials including Treasury chief executive Caralee McLiesh, to say whether it was pursuing a new tax last year.
Treasury documents, released in July, also showed the breadth of work leading into the Budget that officials undertook to explore a tax-free zone of up to $10,000, a new wealth tax and a capital gains tax. The proposals were discussed by Cabinet, but were dropped under political pressure.