Henry Cooke is Stuff’s Chief Political Reporter
OPINION: And we’re back.
Revenue Minister David Parker launched New Zealand politics headfirst back into the tax debate last week, despite not actually announcing any tax changes.
Parker instead set out one of the issues with New Zealand’s tax system – that the Government don’t really know how much money the super-rich have – and said he was giving Inland Revenue the power to figure that out.
He also proposed a law requiring officials to report on the fairness and workability of the tax system as it stands, an attempt, in his mind, to move the debate on from “opinion and conjecture” and into actual facts about what existing or proposed taxes might do.
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Ironically, this has sent us straight back into the most simplistic and aggravating types of debate: The rule-out game.
This is a game that both the media and politicians play every time tax comes up. It occasionally applies to other areas of debate – notably superannuation – but tax is the main playing field.
On Monday, Prime Minister Jacinda Ardern was asked by The AM Show whether Parker’s project was really just preparatory work for a wealth tax.
Ardern first confirmed what Parker had already said in the speech – that Labour would not introduce any more taxes in this term of Parliament.
She was then asked if she stood by ruling out a capital gains tax – not just this term, but while she was leader of the Labour Party. She confirmed that promise still stuck.
But she was then asked if she could rule a wealth tax of any sort while she was leader, and she demurred, saying instead: “You’re asking me to project into the next election and beyond. I am not going to do that because we haven’t formulated our tax policy for the 2023 election.”
In other words: She refused to rule out a wealth tax. There’s your headline for the story and for rapidly-produced press releases from ACT and National. (ACT got in first, as they often do.)
Because this isn’t Ardern’s first go of the rule-out game, her opponents can also paint it as a broken promise. Back in the 2020 election, while battling off claims Labour was secretly going to enact the Green Party’s wealth tax, Ardern seemingly ruled out such a tax not just in the 2020-23 term, but while she was prime minister.
“Would you resign before you put in a wealth tax?” Ardern was asked on the campaign trail, responding, “I won’t allow it to happen as prime minister.”
Labour could squeeze a rhetorical path out of that statement if it needs to, saying Ardern was ruling out the Green Party’s wealth tax specifically, not any tax on static value rather than income. It could call a wealth tax, if it actually wants one, something different. The opposition would treat this mercilessly, running the clip over and over again and calling it a broken promise. Or Ardern could at some point in the next few weeks just rule out a wealth tax all over again.
There is nothing wrong with reporters trying to get very exact answers from politicians or politicians using those answers for campaigning. This is the lifeblood of democratic politics. But we’ve let the rule-out game get a bit ridiculous.
This is the fault of both the media and politicians themselves – and I write this as a reporter who has definitely asked a “Can you rule out X” question. We’ve extended the rule-out game past single political terms and into entire careers. It is reasonable to ask politicians to rule out enacting certain policies in their next term of power in the midst of an election campaign, particularly given MMP means policies that a party has not campaigned on might come up in negotiations. Voters deserve some certainty about what a party will definitely not do, and this gives them that.
Where it gets more absurd is when the question is extended to the next level: Can the leader rule out enacting this policy ever as prime minister? This asks political leaders to handcuff themselves not just from enacting a policy over the next three years, but from deciding they like it, campaigning on it at an election, and then winning that election.
These questions and promises have their roots in voters’ cynicism about politics following the 1980s and 1990s, when two governments enacted some radical changes voters felt they hadn’t really campaigned on.
For National, this was very acute on the issue of superannuation. First Jim Bolger broke a promise to abolish the surtax on superannuation, then his Government had to work out an accord with Labour on the vexed issue as the age was slowly raised to 65, and finally Jenny Shipley lowered the actual rate of superannuation payments – a policy that likely contributed to Labour’s win in 1999.
With this experience in mind, it was superannuation that John Key made an iron-clad rule-out promise around when National leader – he wouldn’t be raising the age while he was leader. After Labour flirted with raising the super age itself, Ardern copied Key, saying she too would resign before changing the superannuation age. And halfway through last term she added another leg to her “I would resign instead of X” pledge, saying she would resign instead of ever introducing a capital gains tax as leader.
The problem with the rule-out game is two-fold.
Firstly, it allows for all sorts of bad faith attacks on policies parties aren’t actually pursuing in any meaningful way. In this current debate, National and ACT can say Labour are just going to go whole-hog with the Greens’ wealth tax, even if the party has no interest in anything near that radical. Because of this, Labour has to either play the rule-out game themselves or just receive an array of attacks on the most radical tax ideas the other side can dream up.
If Labour goes to the election in 2023 with some kind of wealth tax it should be debated then, on its actual merits and demerits. Voters would have plenty of time at that point to consider what was actually on the table, instead of just what has not been pre-emptively wiped off the menu.
This can be flipped too, of course. Labour is not above attacking National and ACT for not ruling out various unpopular right-wing policy ideas. These are unlikely to stick as well as tax ones will, but that won’t stop Labour trying. Ardern also allowed herself into this trap by playing the rule-out game herself with CGT and superannuation.
The other issue with the rule-out game is simply that it handcuffs governments for too long. No party wants to get rid of a popular leader like Key or Ardern. But conditions change over time, and we should not want our politicians to tie themselves down with too many ropes.
Politics should occasionally feature new ideas that adapt to new problems, instead of just a growing list of policies that will never ever actually happen. There are reasonable cases to be made for raising the super age and for changing our tax system in some way. There are also reasonable cases for keeping things the way they are. These are debates Kiwis deserve see made through our politics. Instead, we seem to be doomed to rule them out.