Labour finance spokesman Cunliffe lets capital gains tax cat out of the bag in Parliament when asking English about SOE sales

Labour's finance spokesman David Cunliffe used questions to Finance Minister Bill English about the government's mixed ownership model to push Labour's unannounced, but widely expected, economic policy release on Thursday which is tipped to include a captial gains tax.

In Question Time on Tuesday afternoon, Cunliffe asked English whether he had read a passage in a Treasury report on the mixed ownership model that said: ‘A range of issues would make the complexity of this programme substantial’.

“And does he consider that some policies are worth pursuing, even if they are supposedly complex?” Cunliffe asked.

English replied the mixed ownership policy was worth pursuing, “... because it will give the opportunity for New Zealanders to invest in New Zealand assets at a time where their savings are reaching record levels. It’s good news that New Zealanders understand what needs to happen in this economy and the government is going to help by giving them the opportunity to invest their savings soundly,” he said.

Cunliffe followed by asking whether English had read the passage in the report that stated the plan would take three to five years for the sales to be complete, and entailing ongoing costs of lost dividends.

“And does he therefore agree that governments should undertake policies that take time to build and don’t necessarily release their core revenue potential in the first year?” Cunliffe said.

English replied by asking whether Cunliffe was trying to “conjure up an excuse for why his capital gains tax won’t raise the revenue he is claiming, and therefore is going to have large deficits and more debt?

“Then the answer is no,” English said.

Cunliffe carried on, asking: “Is there any evidence his privatisation policy would, “boost the domestic capital markets,” as suggested in the report? And wouldn’t a better policy address what he’s called the distortion that leads to Kiwis favouring unproductive property speculation, starving productive enterprises of capital?”

The reply from English was that the government planned to achieve both those objectives.

“So we have made significant changes that increased the effective taxation of property, and don’t tax the gains of hard-working New Zealanders who have increased the value of their business, as he is planning,” English said.