Capital Gains-Tax Train Wreck

Driven By a Naive Government

Mike Hosking
NZ Herald

The Capital Gains Tax train wreck is all the evidence you need this is a Government that didn't have a plan.

Why are we here? Because they'd tried this before, got burned twice - and still didn't learn the lesson.

Jacinda Ardern personally overrode her party and ran this policy last election to be enacted by now. But she got dragged kicking and screaming into a cupboard and was subdued to the point where she acquiesced, and promised nothing before 2020, then flick it off to a working group.

The working group was specifically tasked with finding a way to make a CGT work, they couldn't. They told the Government they couldn't, they were then told to go away and try harder. All the while the Government stalled, pretending they hadn't made up their mind.

They're still stalling, pretending they haven't made up their mind and in that is the naivety.  They're taking their issue, and making a complete and utter hash of it.
The Prime Minister, at her post-Cabinet press conference, lectured the media on how to cover this subject, and offered up an olive branch to small businesses and farmers that they'll be at the top of her mind.  She does this because Newstalk ZB political editor Barry Soper said the Beehive's ninth floor is in shock at the reaction to the tax. More naivety.

If they really thought a new all-encompassing, sweepingly aggressive tax was going to be welcomed, they didn't learn enough about the real world as they spent all those years at university, union meetings, and running NGOs.

Enter Finance Minister Grant Robertson, who in his first major speech of the year to business tells them the Government isn't bound by the tax report - why did he say that? Because he's clearly worked out as well that this thing stinks to high heaven.

Adding to the problem is the two months' worth of lord knows what, as they, yet again, stall for time having received one of their 100-plus working group reports. They apparently need to digest, chew over, and presumably try and bring Winston on board with at least a small slice of it.

Do remember the more they cut out of this, the more people they exempt, the less sensible a CGT is. 
If you're taking farms and businesses out, you open the Pandora's Box of the fast burgeoning industry that is tax avoidance. Not to mention the fact the more you exempt, the less you actually raise. And the less you raise, the more questions are asked about the cost of compliance and chasing the returns.

Not unlike the 'Google tax', which although containing a moderate amount of common sense, isn't actually looking to raise a lot, but promises a world of pain in the legal department.

This Government looks yet again like they're fighting to convince anyone that what they're doing is good for the country, makes sense, and it's all part of a clear professional well thought through policy plan.  And if they're on the ropes now, how bad is it going to get when they actually tell us it's on and provide some specifics?