Ardern gives hope

Stuff reports:

Prime Minister Jacinda Ardern says it is “entirely plausible” that any tax changes stemming from the tax working group could be balanced by tax relief elsewhere.

In a video with Stuff political editor Tracy Watkins, Ardern not only repeated that there would be no tax changes in the first term of Government, any changes which came as a result of the tax working group could well be “neutral”.

“We’ve ruled out any changes to, you know, significant new tax changes in this first term. It was a big issue during the election and it was one that we very openly worked through,” Ardern said.

“We’ve said we’d set up a tax working group, we have, it’ll report this term, but anything it suggests wouldn’t take effect until a new term and people will have a chance to vote on it, but it could be entirely plausible that it could be fiscally neutral.”

I’ll be delighted if they do go for a fiscally neutral package, and they’d be wise to do so.

If the TWG just proposes a range of new taxes which results in many or most people paying more tax, then they will have a huge battle on their hands. There is absolutely no need to increase the amount of taxation in New Zealand – especially with their commitment to keep spending under 30% of GDP.

If the TWG proposes a package that broadens the tax base but reduces rates (or changes thresholds) then there is a reasonable chance of widespread support for the package.