National teases Labour over tax divisions, while referencing tax as ‘comfort food’ for the party

Labour leader Chris Hipkins. Photo / Mark Mitchell

The National Party is teasing Labour over its protracted discussions about tax policy, which have recently spilled into the public domain following a series of interviews by leader Chris Hipkins on the topic.

The Acting Finance Minister Chris Bishop had Tim van de Molen ask him a series of patsy questions on Wednesday about the Government’s revenue strategy. In answers, Bishop seemed far more interested in Labour’s revenue strategy than the Government’s.

He used a general debate speech to stick the boot further describing tax as “comfort food for the Labour Party”.

Bishop and Finance Minister Nicola Willis were both quick to seize upon a lack of alignment between Hipkins and former Revenue Minister David Parker over wealth taxes.

One of the criticisms of wealth taxes is that they could cause wealthy people to leave the country and take their money with them.

Parker told an RNZ series, RICH: The meaning of wealth in Aotearoa, he was doubtful this would occur.

“I know the critics of it say that this will somehow cause capital flight. I don’t agree,” he said.

That contrasts with Hipkins, who told TVNZ’s Q+A with Jack Tame that wealth flight was an actual concern

“One of the challenges is if New Zealand’s one of the only countries in the world doing it then you run the risk of wealth flight. So people will literally take their money and put it somewhere where they’re not going to pay a wealth tax,” Hipkins said.

Bishop wound up Labour noting Parker was not even Labour’s revenue spokesman.

On Tuesday, Hipkins said his remarks were drawn from Treasury advice received when the Labour Government was considering a wealth tax last year. Citing international evidence, that Treasury advice stated that “around 3-4% of the in-scope population leave the country in response to a 1 percentage point increase in the wealth tax rate”.

“Most of the advice that we’re drawing on is publicly available,” Hipkins said.

“There was a range of advice presented to us when we were last in government, including the Tax Working Group Report that Michael Cullen chaired the work around the high net worth, individuals, research and the advice that we were provided around a potential wealth tax - all of that advice is out there,” Hipkins said.

Hipkins said he was not bothered by the fact that Parker was discussing the party’s tax policy despite not holding the revenue or finance portfolios.

“I’ve got no problem with Labour Party members talking about the fact that we’ve got policy under development and in this particular case he was asked about work that he was doing when he was a minister,” Hipkins said.

Parker, however, would not comment on Hipkins’ views, when stopped on his way into caucus.

“I’m not going to talk anymore about tax today,” Parker said.

The party’s finance spokeswoman Barbara Edmonds referred back to the Treasury advice on capital flight from 2023.

On her way into caucus, Willis said Labour’s “internal debate is spilling over into the public”.

“It’s messy and actually it’s just sad because what New Zealand needs right now is ideas to grow our economy, not destroy it,” Willis said.

Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.