Analysis: National's tax policy announcement has come off as a good political move, 1News Political Editor Jessica Mutch McKay says.
This was National's big bang policy announcement and it’s a good political move.
The party's MPs can now go out to street corners, markets and town hall meetings and say: “This is what you’ll get under National”.
Labour’s job is harder and more nuanced. It has to tell New Zealanders to look beyond their back pockets and to look at what they’ll lose. That will be done by the party faithful and those who have time to dig into the details of political policies.
There will be a chunk of people who don’t care where the money is coming from and they are probably following the coin.
The cost of living was always going to be the big election issue this year, but this tax policy has helped to show big philosophical differences between Labour and National.
Both major parties know they need to help Kiwis through the cost of living crisis, but they disagree on how to do that.
National wants to give New Zealanders more cash and let them sort through how to spend it. Labour wants to help by providing targeted government packages.
For example, by extending 20 hours of free early childhood education to two-year-olds, and by halving public transport fares for everyone under 25.
Half-price transport for under-25s would also be on the chopping block under National's tax plan.
There are cracks in National's plan that Labour will have to stick its oar into. The foreign buyers' tax is the big one. National is planning to scrap the foreign buyers ban and allow people from overseas to buy homes for over $2 million while paying a 15% tax.
For a group of Kiwis, the idea of selling properties to overseas buyers doesn’t sit well with them. There’s also the question of how much money this will generate. National says the new tax will raise $3 billion over four years including $700 million next year alone.
However, Labour says our tax treaties will make that number impossible.
We have nearly 40 of them and it would exempt huge chunks of the world from the 15% tax. National argues there are workarounds that we’ve seen in other legislation, but it admits that Australians and Singaporeans will be exempt because of trade deals.
There’s also the question of housing stock with National modelling it accounts for fewer than 2000 homes. That’s a lot of stock to reach $3 billion with 15% chunks at a time.
The other political hole is changes to interest deductibility for landlords. This is bread and butter for National and it argues the savings will ease the pressure for Mum and Dad investors and be passed on to tenants.
A lovely idea. It does open a can of worms for National though because Labour can pull out the argument National is propping up “wealthy landlords”.
When you only have a few sentences to convince voters, these attack lines can resonate.
This was a big policy announcement for National. They have timed it to coincide with the end of Parliament, so their MPs can head out onto the campaign trail and sell this policy.
You could feel the tension in the room when this announcement was made.
A lot was riding on it for the two leaders unveiling the policy. It was the biggest test to date for the team auditioning to be in the driving seat come October 14.
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