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Anthony Willy

Tax cheat caught red handed

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A variation on the conventional socialist mantra of tax and spend has surfaced in the run up to the forthcoming election it is: cheat and tax. What it involves is to deny that a Labour/Greens/ Maori Party government if elected has any plan to raise taxes or introduce new imposts, but that it will devolve the whole question to a panel of experts. They will then make the decisions on behalf of the government.

To even float this idea of third party policy making as an inducement to voters to cast their vote for the Labour Party and its acolytes is not only dishonest but exposes the vacuity and ignorance of the new leadership of the taxation of the subjects which by any measure is the most important function of government. The current leadership of the Labour Party does not appear to understand that without taxes no government can function, and that the balance to be struck between the plucking of the goose and its demise is a matter upon which all voters are entitled to a say before they cast their votes not something imposed on them by a faceless committee after they have voted.

In a paper written by myself and Anthony de Reeper, a highly respected tax accountant, in the run up to the last election – see HERE – we traversed something of the history of tax gathering, and in the context of the then Labour Party policy to introduce a capital gains tax we examined the arguments for and against a capital gains tax. Whether that paper had any effect on voters is impossible to say but the fact is Labour was comprehensively defeated at that election. Significantly under successive leaders (I forget how many) it quietly dropped any intention to introduce a capital gains tax if elected. So far so good; an intelligent response by Labour to the wishes of the electorate one may think and sensible politics.

It is almost beyond belief that under the leadership of a fresh, and to some attractive face it is attempting to hoodwink the electors by promoting a stunt which would make Pontius Pilate blush. It proposes washing its hands of any intention to raise taxes or introduce new imposts if elected. Instead it says it will leave the subject of taxation to a committee of experts. They will be charged with deciding whether or not existing taxes should be raised (they certainly won’t be lowered) and what new taxes should be imposed. The new leader has stated publically that the Labour et al government will then act on the views of the “experts”.

Clearly this is not something the new leader has dreamed up – she lacks the political and life experience to do so. This emanates from that disgruntled faction within the party led by David Parker – one of the few members of the Party who has any experience in government and who so actively pushed for the introduction of capital gains tax at the last election. I have a high regard for David. When in practice he was an effective and principled lawyer, and is certainly one of the most intelligent of the current crop of labour Members of Parliament, albeit not embarrassed by much competition on that front. He genuinely believes that a capital gains tax is required to level the playing field between those who make money from their labours and those who make it from the sale of capital assets. It is a tenable proposition that a Labour Party could again attempt to sell to voters. The problem is that wiser heads within the party caution that new or increased taxes are an election looser. To cut the Gordian knot somebody within the Party came up with this deceitful idea of disavowing any intention to raise taxes but leaving it to some faceless “experts” to do so.

There are taxation experts but they deal with the mechanics of collecting the tax which Parliament has mandated. There is no such thing as an expert in what taxes should be imposed. That is a purely political decision about which there is no moral right or wrong merely what a government can get away with before the natives revolt or the goose expires.

Leaving aside the minor difficulty that to leave these questions to a panel of “experts” is a complete abrogation of the most important function of government the question then arises who will be competent to serve on this “panel of experts”? The answer is blindingly obvious: those who have a fixed view of society that wealth is obscene (except their own) and needs to be distributed among the many not the few (they have the same mentality as those who fly around the world bleating about global warming). In short they are those who wish to change the existing taxation arrangements by enhancing the tax take otherwise why have the panel in the first place? The panel will of course comprise the usual collection of left wing academic “economists” and social activists with the possible addition of one or two token appointees who know something about the corrosive effect of high and disparate taxation on the economy, but their contribution will be swamped by the machinations of the do gooders. The result will be entirely predictable more and higher taxes. And what a potpourri of choices will be open to such a panel: Increased income tax, a capital gains tax, a wealth tax levied annually, land tax, death duties, stamp duties, import levies, duties on commodities similar to those imposed on wine, tax on water. The list goes on. It is a measure of the lack of political nouse of the bride to be, or any understanding of how a free enterprise economy works, that these political policy decisions will become the playthings of a “panel of experts”.

Anybody with the slightest acquaintance of political history will understand that all these taxes have been tried in the past and that the effect is always to hobble the economy with the resulting corrosion of wealth creation. Such taxes have their genesis in the post war English Labour government of Clement Atlee who at least was faced with an economy shattered by two world wars. He nevertheless chose to exacerbate the problem by imposing a range of punitive taxes (including all of the above). All failed to achieve their purpose and in the result Britain was sentenced to become a third rate world power until the process was reversed albeit to a limited extent with the advent of the Thatcher governments in the nineteen eighties.

If that is not enough we have had most of these taxes in New Zealand in the recent past: Income tax at sixty plus cents in the dollar (thank you Muldoon), death duties, land tax, stamp duties were all loaded onto the productive sector, the only one we have escaped thus far is a capital gains tax. All of them have been discontinued (Labour to its eternal credit leading the band in the nineteen eighties) and the New Zealand economy as a result is weight for age among the strongest in the world. Not only do the current crop of socialists not have the wit to join the dots but they want to duck the consequences of their social engineering and leave it to a bunch of “experts” to return New Zealand to the nineteen seventies.

All of this was mana from heaven for the non-socialists parties. To their credit after a slow start they exposed the deceit for what it is. Panic then set in and wiser heads such as Mike Williams, the former President of the Party administered a strong dose of political reality to the neophytes who make up the current leadership. Had they listened it was not too late to step back from the precipice and instead attempt to coast home on the empty mantra “it’s time for a change.”

Extraordinarily not only have they failed to heed the advice but they have compounded their deceit by exposing it to public view by amending the policy to say that in Government they will legislate for the proposals of the “panel of experts but that the legislation will not take effect until after the next election. There can be no clearer admission that the “panel of experts” was always merely a smokescreen hiding Labours true intention which is to bring in all or some of these taxes.

The public have become used to the reality that there is always “elasticity” in the keeping of political promises but this cynical attempt to dupe the public is of a new order entirely and I have not the slightest doubt it will cost Labour any chance of winning the election. If there is any good to come from such chicanery it is that it will stand as a warning to future politicians to treat the electors with a modicum of respect.