Labour unveils deeply conservative tax policy
There will be no significant overhaul of the tax system under a reelected Labour government
Good morning and welcome to The Bulletin for Thursday 10 September, by Alex Braae for The Spinoff. Presented in partnership with Z Energy.
In today’s edition: Labour unveils deeply conservative tax policy, concerning new information given about the Mt Roskill church cluster, and Electoral Commission investigating use of donations by NZ Public Party.
Image: Finance minister Grant Robertson (Getty Images)
For those wondering if we'd see anything vaguely resembling socialism or transformation in Labour's new tax policy, the answer is an emphatic no. There isn't really much in the way of overhauling the tax system either – and there has been a promise to keep a lid on anything over and above what has now been announced. All up – it's a very centrist piece of policy, entirely in keeping with how the party has operated in government up until now.
What's in the package? The top line figure is a new top marginal tax rate of 39%, which would apply to income earned over $180,000. As such, this means that 98% of New Zealanders would see absolutely no change to their income tax bill as a result. Also as a result, the revenue gathered up by it will be pretty marginal – about $550 million a year. To put that in context, a recent report found that legalising cannabis would increase the tax take by more than that. And even that $550 million could be somewhat optimistic – as Stuff's Tom Pullar-Strecker reports, many people on incomes of that level or above would be likely to structure them so as to pay lower rates.
There's also a commitment to "continue work with the OECD to find a solution to the issue of multinational corporations not paying their share of tax" – in other words, something may possibly one day happen. Finally, there was a commitment to "no new taxes or any further increases to income tax next term", which firmly slams the door on a range of recommendations painstakingly put together by the tax working group. Very little at all will change if Labour are reelected.
What are they playing at? Stuff's team of Malpass and Cooke have analysed the proposal, and argue that this is a move to protect their current whopping polling lead, while making a small incremental step in the direction they want to go. "This change is not really about raising revenue, but inserting a new bracket into the tax system that high income earners will have to get used to over the years ahead." For many, the prospect of very little changing about the tax system – even with a wildly popular government that brands itself as progressive – isn't a problem at all. Business Desk's (paywalled) Pattrick Smellie says it was a case of "cautious populism" that will leave basically everyone fairly comfortable and happy.
But others on the left will be deeply disappointed – more with what hasn't been announced than with what has. The Greens have described the policy as little more than "tinkering", reports the NZ Herald, and it is fair to say that it falls far short of anything they've proposed to go into the election with – both in the various thresholds for marginal rates, and in the types of tax mechanisms that have been proposed. Labour finance spokesperson Grant Robertson has since ruled out one of those ideas – a wealth tax.
National meanwhile doesn't like it either, with finance spokesperson Paul Goldsmith saying Labour will "eventually widen the net and come after middle-income earners." That's an odd attack line when Labour has been incredibly clear that they're ruling out such moves, or capital gains taxes, or wealth taxes, or inheritance taxes, or anything that would either widen the net or bring in more revenue from those who already have enough. NZ Herald (paywalled) business columnist Fran O'Sullivan had a particularly cutting closing line in her column about how the rich will react to this:
"The 39 per cent tax rate is not going to bust the bank accounts of the "2 per cent". But a capital gains or wealth tax might. They should count themselves lucky that option is not on the table. If Labour had the courage of its convictions, it would be."
Concerning new information regarding the sub-cluster around the church in Mt Roskill was given yesterday. Health minister Chris Hipkins told Radio NZ that a previously undisclosed close contact on someone in the sub-cluster tested positive – they are a student, and it caused St Dominic's Catholic College to temporarily close. Hipkins says some in the cluster don't appear to have appreciated the gravity of the situation at the start of the renewed lockdown, and it is being taken very seriously. The NZ Herald reports further breaches from church leaders could result in prosecution. Why would they not have taken it seriously? This piece from Radio NZ's Anusha Bradley may have some answers – some churches have strong links to evangelical or pentacostal groups in the US, some of which have been actively spreading misinformation about the virus.
For a full and comprehensive report on this cluster and what it means for health officials, read this typically lucid Justin Giovannetti report. And to keep track of the actual locations where casual contacts may have been made, the ministry of health has made a list. Three of them are Auckland eateries – Alice Neville has reported on that, and what measures the venues subsequently took.
And on this wider topic, community testing rates have fallen below targets in Auckland again. Stuff's Bridie Witton has reported on why that is a problem, particularly with the possibility of unseen cases around Auckland relating to active clusters. Anyone with any symptoms around Auckland should be getting one. I can personally say that while the test is not overly pleasant, it also isn't that bad, and there's nothing like the peace of mind of knowing you're not accidentally spreading a pandemic.
An Electoral Commission investigation is taking place into the use of donations made to the NZ Public Party, reports Stuff's Edward Gay. That group has since joined forces with the Jami-Lee Ross led Advance NZ party – Ross himself will be facing a trial in 2021 over donations made to the National party. Meanwhile, the NZ Herald reports a range of financial documents have been released by the Public Party, partly as a result of a wider internal dispute over whether senior figures in the party are undercover CIA agents.
NCEA students in Auckland will get bonus credits to mitigate the effect of the second lockdown on their schooling, reports Stuff. It comes on top of bonus credits students can already apply for. A lower threshold will also apply for kids going for a merit or excellence accreditation.
A powerful first person account about the process of going through a sexual assault trial as a survivor, as told to Alex Casey. What comes through from this piece is that even in a scenario where a degree of justice is done, the path to getting there is long and harrowing. A content warning is advised –the piece contains descriptions of sexual assault, which may be triggering to survivors.
An illustrative story about the deteriorating relationship between two of New Zealand's most important international relations: The ABC reports that two Aussie journalists have had to be rushed out of China, after they were the target of threatening behaviour from police officers. It means that there are now no Australian journalists in China at all, and comes amid what some observers have called a broader crackdown on Western media in the country. Subsequently, the Guardian reports accusations have been made of Chinese journalists suffering house raids in Australia.
Meanwhile, a story from New Zealand:Critic Te Arohi reports a law school paper on Chinese law will not be streamed online, because of sensitivities about how some of the course material could be viewed by Chinese government authorities, which could have consequences for academics or students down the line.
And the relationship with China is also in focus for some watching the upcoming election campaign. Writing for the Asia Media Centre, journalist Portia Mao has profiled the leading ethnic Chinese candidates for both Labour and National, outlined what their backgrounds are, and looked at the degree to which they may have had some involvement in so-called 'united front' work – providing support for the Chinese government's goals in other countries.
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For a feature today, a look at the difficulties of making it big in America as foreign language musicians, and one group who have now cracked it. The Atlantic has charted the rise of Korean superstars BTS, who have just reached the milestone of a Billboard no.1 hit – but they did it with a rare song in English. So what does that mean for the group, and the wider culture? Here's an excerpt:
When I wrote about becoming a fan of BTS last year, I spoke with the South Korean critic Kim Youngdae about the xenophobia that the band has faced in the U.S. over the course of their rise. (Earlier this year, a Howard Stern Show staffer joked about the group having the coronavirus, and fans recently circulated a clip of a radio-station host mocking BTS’s Korean lyrics on air.) “The American mainstream music industry is really hesitant to call Asian artists ‘pop stars,’” Kim told me at the time.
“But the entertainment industry always has to acknowledge the hottest or biggest thing, whether they like it or not.” BTS’s giant, hyper-loyal fanbase was essential in fighting this institutional conservatism, he said. By aggressively streaming, buying, and sharing BTS’s music, these fans forced a dinosaur-like industry to pay attention.
Wrangling is currently underway over the location of a pair of Rugby Championship test matches between the All Blacks and Australia in October. And as this excellent analysis by Scotty Stevenson outlines, they simply have to be held in Australia. The current restrictions in New Zealand wouldn't allow anything like a fair contest, while that could actually be achieved in a city like Brisbane. It might seem downright anti-patriotic to advocate for the All Blacks to not play at home, but think about the alternative – the border quarantine rules being bent so that a game of footy can go ahead.
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