Drunk and Drugged--With a Bren Gun

Labour High On Binge Taxing

The NZ Labour Party has dropped off the wagon.  It has always been a political party which reflexively wants to tax everything.  The secret mantra of Labour has always been:

If it moves, tax it.
If it continues moving, tax it more.
If it stops moving, subsidize it.

But this election, it has thrown electoral caution to the winds, and doubled down on pretty much every tax imaginable, as well as inventing half a dozen new ones.  Labour wants Jabba the State to sit as a bloated behemoth atop every citizen and business, squeezing the last corpuscle of blood and gasp of breath from their tortured bodies.  We have not seen in our lifetime such a tsunami of promised taxes.  We suspect that the Labour leader, Jacinda Ardern has been at the Kool Aid.

David Farrar at Kiwiblog has had a go at totalling up the blood that will pour out of taxpayers in the light of Labour's bren gun "tax, tax, tax" ripping into every sign of economic life.

How much extra tax is Labour going to impose?

Been trying to add up the costs of Labour’s various taxes so people can get an idea of the cumulative impact on families and businesses. The ball park estimates for when taxes are fully implemented are:

• Capital Gains Tax $3.7 billion/year if at 15% (Labour’s own estimates in 2014)

• Canceled changes to tax thresholds $1.9 billion/year

• Imposing ETS on Agriculture $830 million/year

• Water Tax $200 million/year

• Regional Fuel Tax $160 million/year

• Tourist Tax $75 million/year

So in total the extra tax cost in New Zealand will be a massive $6.9 billion a year. Think about that for the size of our population. And that is leaving out any land tax or wealth tax which they have also not ruled out.

Rural NZ will be hit especially hard. Based on Labour’s previous CGT policy the rural sector would be hit with $1.3 billion from the CGT, plus the ETS change and the water tax for a total of $2.3 billion. This will significantly impact the competitiveness of the export sector.

It may of course be far worse than this. Labour refuses to reveal details of its planned Capital Gains Tax. We should not assume it would be at 15%, like their previous policy. This may be why they refuse to give details. They could well decide it should be at 30% or 33%, to match the main income tax rates. Is Labour likely to decide capital gains should be taxed less than income? So if they go for a 30% Capital Gains Tax (and again they refuse to reveal their tax plans) then the CGT revenue from families and businesses would be $7.4 billion and the total tax cost of Labour would be over $10.6 billion.

Jacinda was asked this week if Labour would reduce other taxes to compensate for the new taxes (as National did in 2010 with the GST and income tax switch). She wouldn’t say. So taxpayers are facing the greatest take hikes in history with Labour being the first party in recent history saying they reserve the right to impose new taxes if elected, but won’t give details before the election.

It will be a world of pain if Labour gets anywhere near the Treasury Benches.

STOP PRESS:  Jacinda backs up the Truck

Labour--facing an electorate backlash--has "promised" no new taxes would become law until the public has had a chance to see the beast up close and personal.  Therefore, new tax proposals, once specified and described, will, if Labour is elected, be held off until the next election.  This gives the public a chance to vote and either approve or reject the new taxes.

This is a small accomplishment.  However, excluded from this relief, are all the taxes Labour has already specified.  They would still go ahead.  So, we have:

• The water tax
  
• Income tax (reversing National's forthcoming tax cuts for average-wage New Zealanders, which is already legislated.
  
• Regional fuel taxl wouldn't legislate to let him do it. The money would be used to fund Auckland transport solutions.
  
• Emission trading scheme (ETS)