The CGT battle is won, and whoever takes the credit for it, there will be no CGT while Jacinda is prime minister. That may not be for long, but we can take it as an assurance that it won’t happen for a while at least.
That is all that she has promised, however, and as Mike Hosking points out, it may be the end of CGT, but it is not necessarily the end of higher taxes. quote.
What needs to be remembered is two things. One, a CGT might be off the table, but other tax increases or new taxes aren’t. Two, this is a government that likes to spend your money.
Never forget the tax cuts we would have been enjoying right here and right now were cancelled by this lot, and have been handed out to the hundreds of committees and working groups wandering the country coming up with their never ending series of reports.
end quote.
There were lots more taxes discussed by the Tax Working Group. Many of them were environmental taxes, such as water taxes and fertiliser taxes. Little or nothing has been said about those so far. quote.
A CGT is gone, but there is any number of other taxes this lot will be very closely considering to make up the difference. Why? Because, one, they’re re-distributors. And, two, the CGT was going to raise $8 billion in quick order. That money was needed for all the promises, and they have to find a way to make up the shortfall. Watch out for a new tax bracket for high income earners, for example. end quote.
Yes… and this could happen as soon as next month’s ‘wellbeing’ budget. This would not be a significant breach of an electoral promise, because it was not a major electoral policy, or promise either way.
In 2014, both Labour and the Greens campaigned on reintroducing a top marginal rate of tax. In Labour’s case, the threshold for this tax was $150,000. If you remember, however, Helen Clark’s government introduced a top rate of 39% on incomes over $60,000, and even though that was 19 years ago, I would be surprised if the government stuck with their proposed threshold of $150,000 now. quote.
The ideology of this government hasn’t changed, even if one of their mechanisms has.
end quote
There are just not enough people earning over $150,000 to make a tax threshold at that level worthwhile. My guess is that the threshold will be $100,000, and the tax rate at that level will be 38%, or similar.
CGT was never going to raise $8 billion anytime soon, but the government believed that it would. They are now looking to find ways to plug the gap that the failure of CGT has created. In other words, after all the drivel about ‘fairness’ and how the burden of taxation falls entirely on the wage earner, they are going to solve this problem by taxing the wage earner even more.
Yeah. That makes sense.
The other reason I think this will be done sooner rather than later is because although budgets are held in May, most tax changes do not happen for some time, reflecting the need to allow IRD sufficient time to implement new systems. Any tax changes introduced in next month’s budget will not be implemented until October at the earliest, and most likely next April. If a proposed tax hike is kept until next year’s budget, however, this will mean that the government will effectively go into the election campaigning on tax increases… and we all know how that is likely to turn out. National, if they have the people to pull it off, will be able to screech from rooftops about how the government is raiding the pockets of hard working people, and how they would reintroduce their previously proposed tax cuts instead. As political suicide goes, it would be mana from heaven for National.
We will know soon enough, of course. In the meantime, as talk of higher top rate taxes intensifies, it’s worth remembering that this is a tax and spend government… although ‘tax and waste’ would be a more accurate title.
CGT may be gone, but it ain’t over yet. Not by a long way.