The Week in Politics: Parker's proposals set off a wealth tax debate

5:22 pm on 29 April 2022

By Peter Wilson*

Analysis: Revenue Minister David Parker's mission to find out how much tax the wealthiest people are paying raises questions about the government's intentions.

Labour MP David Parker

Labour MP David Parker Photo: RNZ / Angus Dreaver

Revenue Minister David Parker said on Tuesday he had virtually no idea how much tax New Zealand's wealthiest people were paying, and he wanted to find out.

He said it was part of the work he was doing on new legislation which will become the Tax Principles Act, setting out the rules around a fair taxation system.

Parker announced his mission in a speech at Victoria University, and it raised questions about what he really meant and suspicions about what the government's intentions were.

National Party leader Christopher Luxon said the speech was confusing and the reason for the proposed legislation was unclear. He probably wasn't the only one thinking that.

On Morning Report the following day Parker had another go at explaining what he was talking about: "What I'm saying is that we need to have an understanding about what rates of tax are actually paid, and then politicians and voters can have a debate about what tax rules ought to be," he said.

"But we ought not to be having a debate about what the facts are when the facts can't be proven."

Geof Nightingale, a PwC tax partner, may have cracked it. He said on the same programme it was clear Parker wanted credible data to show the unfairness of the current system. "It feels like it is attempting to establish a political narrative for us as voters about the absence of a capital gains tax."

The NZ Herald headlined its report 'Parker raises wealth tax dilemma' and said the minister reckoned the wealthiest people weren't paying their fair share.

Stuff ran the headline 'What are David Parker's new tax principles really all about?' and political editor Luke Malpass wrote the article.

"Make no mistake, there are no tax changes today, but this exercise isn't being done for fun," he said.

"It is definitely setting the scene to work out… whether those with lots of economic wealth are being taxed enough."

In his speech, Parker said the government had no intention of imposing any new taxes during its current term, and Prime Minister Jacinda Ardern is on record as saying there won't be a capital gains tax under her watch.

That raised the question about the next term, and what would be in Labour's manifesto for next year's election. Asked about that by Newshub, Parker said he couldn't answer because tax policy hadn't even been developed.

The task of gathering the data on how much tax the top cohort pays has been given to IRD. Parker said the department was the only one that could do it.

Luxon, on Morning Report said, IRD was capable of doing full audits and investigations of people whether or not they were wealthy.

His shadow finance minister, Nicola Willis, said it seemed Parker was reviving plans for a capital gains tax.

ACT leader David Seymour was more precise - Labour was "planting the seed for increased taxation to fund their addiction to spending".

The Greens didn't think Parker was going far enough. Finance spokesperson Julie Anne Genter said in a statement research by IRD and the Treasury suggested the wealthiest New Zealanders paid just 12 percent of their income in tax.

That was because work was taxed but wealth wasn't, and wealthy individuals gained their income from untaxed or lowly taxed sources.

Genter said a capital gains tax or a wealth tax was the way to go, and the government didn't need research to find that out.

If Labour does decide to campaign on some form of wealth tax at the next election there will be a stark choice for voters, because National wants to cut taxes and remove the existing top tax rate.

With Parliament in its second and last week of the Easter recess, Parker's proposals got top billing while other developments included:

The government rolled out a new face mask exemption card for people with genuine reasons not to wear one. The new, personalised cards would have a legal standing and anyone questioning them could be contravening the Human Rights Act.

"We will not be cancelling the old cards or requiring affected people to go through the process of getting a new card if they don't want to," said Covid-19 Response Minister Chris Hipkins. "However, the old cards will not have the legitimacy of the new cards."

Housing Minister Megan Woods announced plans to spend $1.4 billion on infrastructure in five Auckland suburbs, creating build-ready land in Mt Roskill, Mangere, Tamaki, Oranga and Northcote.

She said the funding would enable up to 16,000 homes to be built over the next five to 16 years.

The money is coming from the government's $3.8 billion Housing Acceleration Fund, created to get past one of the roadblocks to new housing development which is the lack of infrastructure on development land.

Luxon, speaking on Morning Report, said New Zealanders didn't have a clear idea of what Maori co-governance meant and challenged Ardern to build her case for it.

He said clear guidelines needed to be set out on what was and was not included when it came to constitutional issues such as co-governance. "If we don't, it drives division."

Luxon reiterated his opposition to the new Māori Health Authority. "By their (the government's) own admission they're not going to have a single improved Māori health outcome for five years," he said.

"The real thing we need to do is keep a single system but have huge amounts of innovation and targeting within it."

Political scientist Dr Jack Vowles said part of the problem was the vague dividing line between co-governance and co-management of assets.

Political parties could waltz around the co-governance expression because it wasn't easy to understand in the first place.

He said co-governance had been occurring under National and Labour governments for more than 10 years.

*Peter Wilson is a life member of Parliament's press gallery, 22 years as NZPA's political editor and seven as parliamentary bureau chief for NZ Newswire

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