We won, you lost, eat that!

It is delicious to be able to rub Michael Cullen’s nose in the failure of his proposed Capital Gains Tax, (CGT). It is a massive black mark against him, of course, not being able to get the proposed tax across the line. So what does he do? He blames Winston. Such is the arrogance of the man. Really, he is a despicable individual. quote.

Sir Michael Cullen, who chaired the Tax Working Group, said he was disappointed but “not in the least surprised” there would be no capital gains tax. 

A capital gains tax had been vetoed by Winston Peters, leader of Labour’s coalition partner NZ First, Cullen said.

“I always thought there was a high priority that NZ First would veto any legislation.”

end quote.

As is their right, Sir Michael, seeing that they are in government, and you are not. quote.

Cullen had said in November that he believed it might be “last chance saloon” for a major change to broaden the tax base.

“The problem we have is New Zealanders seem not to want an inheritance tax, or a wealth tax, or a land tax or a capital gains tax but they still want to complain about growing inequality of wealth.

Stuff. end quote.

There are many theories as to why this cornerstone policy of the current government has failed, but to me, the reasons are obvious.

The TWG’s report came up with a proposed CGT that was actually the most draconian in the entire world. It taxed capital gains at marginal rates (which would just about always be 33%) and included virtually everything – shares, businesses, farms, rental properties and the bach. The few exemptions – mainly artworks and racehorses – made no sense, unless you are a wealthy leftie with a penchant for art… like Sir Michael himself.

Photoshopped image credit: Boondecker

It is my belief that the TWG proposed the draconian system that it did to give the government the opportunity to water it down, and present the public with a softer version of the tax, which is what we all expected yesterday.

In the days when Michael Cullen was in government, ministers would have rolled up their sleeves, taken a red pen to the report, and come up with a more palatable proposal that would probably have received muted approval.

But Michael Cullen has missed one very important detail about this government. Ministers in this government do not do any work themselves. They commissioned the TWG to come up with a proposal that they were then going to run with at the next election. That was always going to be it. No adjustments were going to be made.

If you think of the quality of the ministers we have at the moment, that makes complete sense. None of them – not one – has any economic understanding or tax expertise. That is why the TWG was appointed in the first place… TO DO THE GOVERNMENT’S JOB FOR THEM.

If the TWG’s report had not been so draconian, and had proposed a flat rate of tax (say at 15%), exempted all family homes including lifestyle blocks, allowed a rollover relief for shares, exempted businesses worth less than $2 million and left Kiwisaver accounts alone, the government my have got it across the line. Expecting this inept bunch of ministers to have enough of an idea on taxation matters to be able to rework the report was a bridge that was way too far. They are simply not capable of doing this.

So Sir Michael can blame Winston all he wants, but in truth, he did a very poor job himself. He proposed a tax system that was never going to be palatable to anyone except an extreme hard left government, and the ministers and their minions were incapable of doing anything to improve it. What a ship of fools.

Nevertheless, Sir Michael must be happy about one thing. Chairing the TWG has made him more of a ‘rich prick’ than he ever was before.