It was really a shock to the political left. The capital gains tax, in one form or another, was accepted as an important part of the battle to create a more equal New Zealand. It came to symbolize the struggle against much of what went wrong in our society in recent decades. So there was much in the minds of people about the need for some form of capital gains tax that would hit the rich and level a playing field that had become so distorted.
Of course, it was widely acknowledged before yesterday's announcement that any new capital gains tax would likely be diluted. In fact, many on the left were already critical of the fact that the government had established the Tax Working Group with a highly diluted approach, where large exceptions were expected, including the expectation that a CGT would be fiscally neutral.
But few expected the government to reject any form of CGT – much less Jacinda Ardern's direct rejection of even revisiting the issue in the future.
Anger and disappointment on the left
For many on the left, the decision is an accusation of the whole idea that this government will be transformative. Danyl Mclauchlan argues that the CGT program was one of the four main policy agendas for this government – the others being the KiwiBuild, the Carbon Zero Act and the Wellbeing Budget – and there are clear problems now in delivering them – see their column, Four months in The "year of delivery" of work is a disaster.
He desperates that Labor eliminated the tax after starting "one of the most disconcerting and disastrous public policy debates imaginable, making John Key's flag change campaign look like the landings in Normandy."
He says that any strategic victory to abandon the tax will come "at a cost of one of the Labor Party's most important long-term policies, and it was his failure to control his coalition partner or even try to argue in favor of a forced tax reform" . pay such a high price and bitter. "
Mclauchlan argues that Ardern could have won the debate and secured a mandate for the changes, but he simply did not bother. In contrast, even John Key was able to use his political capital to campaign and win unpopular policies.
Other left-wing bloggers are very unhappy. In Right Turn is calling for a Labor Party boycott: "If you want to change, do not vote for the Labor Party, do not give to the Labor Party, do not volunteer for the Labor Party. Give your vote, your money, your time and effort to and if you do not, Labor will continue to treat you like a fool, and you will continue to promise change while you are not delivering any "- see: Do not be deceived again.
They also argue that the decision means that the government will not have the money to afford many of its future political goals: "Effective policy costs money, and that government has just deprived itself of this vital tool. they chose to have a government that could not pay for things.They chose not to be able to do the things they promised "- see: The cost of cowardice.
This idea is set out in detail by inequality researcher Max Rashbrooke, who argues that many other government priorities will now be paralyzed by the lack of future revenue: "building more state residences, eliminating introduced predators, and repairing mental health services, among others" . Require significant funds, again well above what will be generated under existing tax configurations "- see: Closing the capital gains tax threatens other government plans.
In particular, "consider the Prime Minister's promise to halve child poverty in a decade, possibly the closest political priority to his heart. It is very difficult to see how this can be achieved without the $ 3.4 billion according to the most recent estimate, will increase. "
Of course, some are suggesting that the left should not be too difficult in Ardern and Labor because they had to deal with the reality of the MMP and it was New Zealand in the first place that did not move in the CGT.
David Farrar unmasks this idea: "The reality is that Labor chooses not to continue, how do we know that?" Ardern's announcement that Labor will not implement a CGT ever while it is a leader.If this were simply about NZ First, then Ardern would have said we do not have the numbers in this Parliament for this, but we believe that this is important and we will try again when we get the numbers. That was what National said when it did not get the numbers. : Analyzing the CGT back down.
In addition, Farrar argues that if the Labor Party really wanted, it could have its coalition partner: "An agreement could have been made with Winston. If Labor really wanted the numbers to pass to this Parliament, then it is clear that an agreement could be made for some form of CGT. This is what politics is about. See the decision to ban oil and gas. This was against the interests of NZ First as much as a CGT in exchange for its waka jump law The work could have offered NZ First some other victories if they wanted to. "
So the Labor Party activists will now lose part of their faith in Ardern and his government? A news article provides mixed reports on this – see activists at Jason Walls's Long-Term Lab do not think the party will be much hurt by the rejection of the CGT. For example, former Labor Party President Mike Williams suggests that while there are "elements, especially the trade unions and the extreme left of the Labor Party, who would be upset," he "did not think the broader Labor Party base would be concerned too much". on the rejection of the CGT ".
But Anna Bracewell-Worrall of Newshub reports that "the Labor Party is facing a massive reaction from its base to give up any hope of a capital gains tax (CGT) – even the young laborers and the ever-loyal trade unions are furious" . the capital gains tax backdown, leak reveals.
According to this report, "Newshub has leaked a discussion of a secret Young Labor party to Facebook revealing that it is frustrated with the decision." Labor Party believers say they are "very disappointed" and "# 39" ; exponentially irritated with the role of New Zealand ". and complaining about & # 39; unfulfilled promises & # 39; "
Questions about political leadership and courage
It is not only the political left that is expressing surprise with the capitulation of the Labor Party in the CGT. Some media also questioned Ardern about why she gave up what was supposed to be a central and principled part of her philosophical agenda.
In the prime minister's announcement, the editorialist Thomas Coughlan asked the very objective question of Ardern: "Are you worried that you now lead the party of capital instead of labor?" And now he has followed this with an article suggesting that instead of Ardern and his government implementing the transformation, they are actually the ones that are transforming – into a wary and weak government unwilling to make the hard and necessary decisions – see : do not do it.
Newspaper editorials also defied the government's convictions. Yesterday, the Dominion Post asked whether the decision came from "cowardice or pragmatism," but suggested that the two are indistinguishable anyway. The editorial suggested that more debate and leadership were needed for the CGT proposals to take off: "Labor voters were divided into the pros and cons of a capital gains tax. It is a situation where brave political leadership and persuasion were needed, but for whatever reason, a thorough and exhaustive debate on fair and unjust taxes failed to "- see: Tax on capital gains: political capital, but what do I gain?
The newspaper says Ardern had a "lack of courage," and regrets that an opportunity has been missed: "If there was a time when a significant change in the tax system could have taken place, such as the justice and transformation promised by your now is the time. " And there is the question of "whether the Working Group on Taxes was just an expensive waste of time with a predetermined result."
Likewise, according to the New Zealand Herald, "The decision bears the marks of pragmatism and not of strong leadership," leaving "little evidence so far that Ardern will make harsh but unpopular decisions to fulfill his convictions" – see: doubts about the coalition.
The newspaper, which mentions its own support for more capital gains taxes, claims that the decision-making process on this vital issue leaves much to be desired: "If laws were introduced only when there was a mandate, we could also be governed" . by a series of weekly referendums. "
Many political commentators are quite impressed with how easily Ardern capitulated on the subject. For example, Tim Watkin says that the decision "is truly remarkable." She did not deliver what Labor wanted, she did not even get a compromise version. If Ardern can not look down or persuade Peters now, with the world at his feet, voters are left to assume that she will never be able to do so she is not capable or prepared to go to the wall for a policy like this – a labor passion and a bogeyman, something she made a captain call, a policy with intergenerational ramifications – then what will it take? see: Jacinda Ardern hits the ground thanks to the NZF's carefully generated torpedo & # 39; (CGT).
And one commentator says this episode proves that Gareth Morgan was right to argue in 2017 that Ardern was not willing to make transformational changes, but it was just "the lipstick on the pig" of a Conservative Labor Party – see & # 39; Lipstick & # 39; ; s & # 39; from Jamie Ensor to Porcupine: Sean Plunket detonates the backdown of PM Ardern's capital gain tax. Plunket says, "She was never really committed to it in the first place. She was just lipstick, there was no substance" and now the "lipstick came out of the pig".
Finally, while many are seeing the CGT's capitulation as a failure of leadership and conviction, there is an argument to be made that it was actually worse than that – and the whole exercise was performed in bad faith. Writing on RNZ's website, I suggest that there might never have been any real intention to implement a capital gains tax – see: Signs Labor did not intend to implement the capital gains tax.