The Labour Party's much anticipated "big reveal" of its policies today plays up the threat of foreign ownership in a nationalistic call to arms worthy of Winston Peters.
Launched under the slogan Own Our Future, in a fiery red website and social media blitz, the 2011 election campaign primarily promotes Labour's opposition to part-sales of state-owned assets—plus a tax on what Michael Cullen once described as the "rich pricks".
Also revealed is further detail on its capital gains tax. Plus a nasty surprise for those earning over $150,000, an income tax of 39 percent. That will pay for the party's GST-free policy on fruit and vegetables.
The 15 percent CGT will apply to all capital gains except those derived from the sale of a family home. It will apply to farms but not the farmhouse. And long-held owner-operated small businesses are cut a break; those who've held their personal business for 15 or more years get an exemption for their first $250,000 in capital gains. The expected revenue from the CGT is $78 million in year one, $2.27 billion after ten years and $26 billion in five years.
This tax isn’t backward looking, meaning any pre-CGT gains on assets won’t be subject. When the tax is introduced, assets will be valued. This “valuation day” will determine the date after which gains will be subject to tax. Exactly how this process will work will be explored by an "expert panel".
Labour says it decided against adjusting gain for inflation, based on observations of other countries' experiences.
Leader Phil Goff says this will result in investment shifting from speculation on property
to the productive sector.
"This will lead to more jobs with better pay, give the economy a much-needed boost so that we can pay our way in the world and make it easier for more Kiwis to buy their first home," he says.
“We need to build an economy that has the capacity to create safety nets to pay for future shocks, like the devastating Canterbury earthquakes."
Not surprisingly, ACT leader Don Brash has slammed the CGT.
"A capital gains tax means you are clobbered twice: once when you create or earn wealth, the second time when you dispose of it. The fact that we already have it in some form is no excuse for extending it."
Labour's also calling its tax plans "bold" but its website says it's simply bringing "New Zealand in line with the rest of the developed world, so those who can afford the least aren’t supporting those who could contribute more."
“This is about everyone paying their fair share—nothing more, nothing less. We won’t be borrowing billions of dollars to give tax cuts to the wealthy like the National Party is. Instead, we will be asking those earning the most to pay just a little more, to help meet costs like the Canterbury earthquakes," says Goff.
On asset sales, the party claims the plan proposed by the National government will result in no net gains to New Zealand.
"After just 10 years, they will have pocketed the $6–7 billion the country made from selling the assets in the first place. We know this because it has happened before, with the sale of the Bank of New Zealand and Contact Energy. Currently, ⅔ of Contact Energy’s dividends goes overseas—in excess of $1 billion since National sold it in 1999."
Says Goff: “That is incredibly short-sighted and will see New Zealanders become tenants in their own land. For goodness sake, if you’re in a hole, why would you sell off the ladder?
“New Zealanders have said loud and clear that our assets should not be put on the block. We need to own our own future, to hold it and safeguard it for future generations. Putting our heritage up for auction is not the solution."