Politics

Audrey Young on housing crisis: Jacinda Ardern and Grant Robertson choose wrong way to handle broken tax promise

OPINION:

Prime Minister Jacinda Ardern had two ways to approach Labour’s broken promise not to change taxes beyond those policies it set out in the election campaign.

She could have acknowledged it upfront and justified the change of heart, given the extreme house price inflation – that was the honest and honorable option.

Or she could treat New Zealanders as though they were stupid and deny that extending the qualifying threshold to treat capital gains on investment properties as taxable income was a broken promise.

Ardern chose the latter.

She also said, wrongly, that Labour had been silent on extending the threshold.

During the election campaign, Finance Minister Grant Robertson said definitively on September 9 there would be no extension of the brightline test – which taxed the capital gain on investment properties sold within five years of purchase.

Today he announced it would be extended to 10 years. That means a lot more people will be paying the existing capital gains tax.

The explanation by Robertson was that he had been “too definitive” in his answer to a question which sounds a little like he meant he was being “too honest”.

A minister giving an honest answer to an honest question in an election campaign is not being too definitive.

That could be an explanation if the minister had stealthily been planning an extension all along but didn’t want to reveal it.

But the reason that Robertson was not repeatedly questioned during the election campaign about extending the brightline test was because he had been so “definitive” about promising no tax changes beyond those definitively outlined.

Those definitively outlined changes were the introduction of a new top income tax rate of 39 per cent applying to income above $180,000, the fuel tax increases already legislated for and trying to get multinationals to pay more tax.

The reason that Robertson was not repeatedly questioned during the election campaign about extending the brightline test was because he had been so “definitive” about promising no tax changes beyond those definitively outlined.

There was no mention of a change to the brightline test.

Ardern has also sought refuge in the fact that National’s John Key introduced the brightline capital gains tax, initially set at re-sales of properties within two years of purchase.

National may be sidetracked into the debate about whether it is or isn’t a capital gains tax (CGT) – although as a tax on capital gains it obviously is one and has always been one.

Nomenclature is not the most relevant factor in this debate.

It is the fact that the threshold for taxable income on investment property has been changed when Labour’s big promise was there would be no changes other than those specified.

By any definition that is a big broken promise.

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