Finance Minister Grant Robertson says the Government's tax-switch proposal had "merit", but he's a "team player" and continues to believe in the Labour Party despite Chris Hipkins' decision to torch the idea.
He doesn't believe Hipkins is a chicken by walking away from the idea and then ruling out a wealth or capital gains tax under his leadership, a move Robertson says is just a continuation of former Prime Minister Jacinda Ardern's position.
Hipkins on Wednesday morning announced that Labour would not campaign on a wealth or capital gains tax at the election. It echoes a call from Ardern during the first term of her Government, when she said ruled out ever introducing a capital gains tax.
The Prime Minister said he didn't believe the current economic conditions allowed for a shake-up in the tax system and "experimenting" with a wealth tax also didn't reflect his 'back to basics' approach.
"New Zealanders can be assured the Government I lead is listening and will be focused on making life a little easier without implementing big uncertain changes."
The announcement was timed to come out as the Government released documents developed as it put together Budget 2023.
They showed the Government considered a tax-switch, which would have included a $10,000 tax-free threshold and other smaller changes paid for by a 1.5 percent tax on net wealth over $5 million. The tax wouldn't have applied to some personal assets, like the family home, and would have only captured about 46,000 New Zealanders.
Fronting media on Wednesday afternoon, Robertson said he wouldn't say he was gutted by Hipkins' decision to kill off the tax-switch.
"What I would say is it's an idea that clearly I think had some merit. I wouldn't have put so much work into it if I didn't think that it had merit," he said.
"But I also am a team player and I'm also somebody who's very conscious of the economic conditions that we're in."
He said it was his job to look at all options and the wealth tax aspect wouldn't have come into effect until after the election, allowing Labour to campaign on it and gain a mandate.
While Robertson said he felt the tax-switch work deserved to be done, the Government's doing other things to assist Kiwis, such as in health, housing and education.
He argued these would be at risk under a National Government that is yet to announce how it would fully pay for its proposed tax cut regime. National says it will pay for its cuts by getting rid of "waste" in the bureaucracy, but will release its full alternative Budget closer to the election.
Hipkins has previously hinted at a desire to make changes to the tax system, saying in January that he believed the Government should always look at how to make it "fairer" and that some Kiwis "aren't contributing their fair share". He's also said tax thresholds will eventually need to change to reflect inflation.
Asked what was the point of the Labour Party if it didn't do what it believed in, Robertson listed a number of areas where he believes the Government's made a difference, like "building state homes" and "improving the schools that our kids learn in".
"It matters what we do here. Today a decision has been taken not to go ahead with two types of taxation.
"That might be something that I would have liked to have had to happen, but it's not happening. I'm a team player. I believe in the Labour Party. I believe in what we stand for and the good work that we are doing."
He told media the Government did make changes to the trustee tax rate at the Budget. The rate was raised to 39 percent, in line with the top income tax rate, something Robertson believed would bring more fairness to the system.
The Labour Party is expected to announce its full tax policy soon.
Robertson wouldn't provide any details about what will be announced, but he did say he viewed a tax-free threshold as "the best way to deliver tax relief".
"What that means is that people are on the lowest incomes, in the case of the proposal we were looking at, were going to get $20 a week, rather than a tax change that will be skewed to those on higher incomes."
However, he said there would need to be a way to pay for a tax-free threshold.
Responding to the announcement on Wednesday, James Shaw, the Green Party co-leader, said Labour was sending a message that New Zealanders need to vote for the Greens to get progressive change.
The Green Party has proposed a wealth tax as part of its Income Guarantee package.
"Households are struggling, our tax system has never been more unfair, and the solutions have never been clearer. The time for tinkering is over, the time for political courage is now - the only option this year is the Green Party," said Shaw.
"Everything we need to make life better for people in Aotearoa exists. What’s missing is the political willpower to use it. So, my message today is clear: if people want a government that will build an Aotearoa that works for everyone and a fairer tax system to pay for it, then we need more Green MPs."
He said it's up to the public to decide what happens before and after the election.
"Nothing Labour says now will stop the Green Party from fighting for a fairer tax system."
National leader Christopher Luxon said Labour couldn't be trusted on tax.
"The Coalition of Chaos is plainly divided on tax, with the Greens hugely in favour of wealth taxes and Labour fighting internally over them. The chaos has come before the coalition. There is division within the parties on the Left, and between them on this core aspect of economic policy."
ACT leader David Seymour said he believes the Greens and Te Pāti Māori could still force Hipkins to introduce a capital gains tax.
"Hipkins’ arm wouldn’t be that hard to twist. He’s on the record wanting a CGT, the only reason he’s saying this now is that he wants to be elected in October more."
