Matt McCarten: Greed ain't good, now it's being understood

Phil Goff's conversion is timid and late but it's better than never. Photo / Natalie Slade

At last some of our political leaders recognise the game is up.

Phil Goff's tentative steps in backing a capital gains tax on property is a commendable start in rolling back the tax rorts the wealthy have been getting away with for 30 years.

The "screw the poor, feed the rich" ideology advocated by senior politicians for years is coming to an end.

Goff's moves have more to do with Labour needing to differentiate themselves from National if they are to have any hope of closing the polling gap between them.

Even so, Goff's earlier promise to maintain social spending, as well as not selling any public assets, left him no choice but to tax unearned wealth. After all, the poor haven't got any more to give.

Our current tax system has favoured our wealthy citizens for so long we think it's normal. In just three decades, we've gone from one of the fairest tax countries to one of the most unequal with the gap between the rich and the poor accelerating faster than any other OECD country.

In the same period, 10 per cent of our GDP has been transferred via various tax changes from wage and salary workers to those people with assets.

It started with slashing top income tax rates on individuals followed by abolishing luxury item taxes, property stamp duties, border tariffs, death duties and, yes, capital gains taxes.

To balance the books they sold off our best assets, closed down public services and imposed a flat goods and services tax that slammed the poor.

Just for good measure, they introduced user pay services.

The result was a deliberate increase of wealth at the top of the heap at the expense of everyone else.

We once prided ourselves on being an egalitarian community where "Jack was as good as his master". Nowadays the ethos that pervades every aspect of our society is: "I'm all right Jack."

We got caught up on the greed-is-good bandwagon - getting ourselves into the mess we have now.

Does anyone still buy the nonsense from John Key that he can borrow zillions offshore to give the wealthy a tax cut so in turn they have enough to buy a stake in the assets we already own so he can pay our loans off? Haven't we gone through this swindle before?

Predictably the property spokespeople are whining. But come on, how can anyone look us in the eye and justify that it is moral for a worker or a small business owner to pay about a third of their income in taxes yet someone who sells a property and makes hundreds of thousands of dollars in profit pays nothing? They can't.

Labour's timid 15 per cent capital gains tax is still far less than it should be. On just the basis of fairness, capital gains on any income should be taxed at the same rate as a business or a worker pays.

If all income from capital gains - including income from inheritance, shares and luxury goods - was taxed then we'd be able to substantially reduce company tax and slash PAYE. Throw in a 1 per cent financial transaction tax and we'd be able to replace GST as well.

I know it's terrifying for any politicians to broach a tax system where the rich may have to pay their fair share. So I have to be grateful that at last a major party is putting capital gains tax on the table.

The Green Party has been pushing this for some time and they'll be happy that their potential coalition partner coming on board is a win.

It's been a long political honeymoon for the greedy. The Lange-Douglas government sold us the nonsense that if the rich paid less tax they'd use their extra money to create jobs and wealth for the rest of us.

It was seriously called the trickle-down theory. But the consequence today is most New Zealanders are poorer and there are more unemployed than there were then.

Goff's conversion is timid and late. But it is better than never.