While a capital gains tax is off the table for the Labour Party, and probably a wealth tax as well, the Green Party are back with a new proposal, an “excess profits tax”. The benefit of an excess profits tax is that it’s not directly levied on voters, instead businesses are the intended recipient of this new tax.
The Green Party has issued a discussion document in order to start a conversation about tax. There is an opportunity for anyone to comment, albeit there is no stated closing date for comments. This seems likely to be something that develops further into an official tax policy for Election 2023, so comments are best provided in 2022.
The discussion document sets the problem definition as “Successive governments have failed to ensure we have a fair tax system, which in turn means there is not enough revenue to provide the standard of public services New Zealanders deserve. … The aim of excess profits taxes is to level the playing field, so that big businesses are not able to profit in excess when so many people are struggling. … The Green Party considers that record profits during a time of economic hardship for many New Zealanders are immoral and unsustainable.”
When taxes are targeted toward voters, politicians often get a clear view of the acceptability of a proposal, but there is also the risk that the feedback, in this case, could be “higher taxes are good … if someone else is paying it”. The problem with targeting the company tax rate is the potential for unintended consequences for jobs, investment, productivity and prosperity.
It’s always good to see some challenge to the status quo, and the Green Party should be commended for putting a proposal on the table for feedback. Now is the time to provide that feedback.