Election: Labour backs down on tax, will not introduce anything from working group until after 2020 election

Labour will wait until a second term before any tax changes from its working group will be introduced.

It made the u-turn after sustained attacks from the National Party over the vagueness of its tax plans.

Other than Labour's already announced polices - such as cancelling National's planned tax cuts, extending the bright line test to five years, and introducing water and tourist levies - no new taxes or changes will kick in before the next election, Labour said on Thursday.

They would legislate for the changes before the election but nothing would hit until April 1 2021 - after the 2020 election.


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"We will undertake the work and we will take it through to legislation. But no outcomes from the tax working group will come into force until the 2021 tax year - ie 1 April 2021," Finance spokesman Grant Robertson said.

Robertson said this was a good balance between the urgency of the issue and the certainty New Zealanders wanted.

Labour leader Jacinda Ardern said it was her call to delay the implementation until after the 2020 election.

"I heard from voters they wanted some certainty," Ardern said.

"I'm still doing the work; that work is still important. "

Roberston said National had been scaremongering.

"The National Party have been spinning lies that Labour are increasing personal taxes. We are not," Robertson said.

Labour said it would not make any changes to corporate tax rates, personal income tax, or GST.

"Every single one of the commitments that Labour has made for the next term of Government ... all of that work is fully costed for and paid for by existing revenue. It never did and it never will rely on revenue from the tax working group."

Prime Minister Bill English said it wasn't much of a backdown as Labour were still committed to cancelling tax cuts already legislated but not yet in effect.

"They haven't moved on income taxes. The current law of New Zealand is that on the first of April someone on the average wage will be about $1000 a year better off thanks to tax cuts," English said.

"Labour will change that."

Finance Minister Steven Joyce said Labour had begun a "long march back but they've got a way to go."

"They've postponed the introduction of two taxes but have reaffirmed their intention to impose a water tax, regional fuel tax, tourism tax, income tax increases, and bringing farming into the ETS," Joyce said.

Both Joyce and English describe Labour's decision to cancel their planned cuts to personal tax as a tax hike.

"Labour keeps denying they are putting up income taxes but they have today confirmed again that would legislate to remove the tax threshold changes that occur on April 1. That means someone on the average wage would be $1060 a year worse off if Labour becomes the Government," Joyce said.

Labour say 70 per cent of families with children will be better off under their family incoe plan.

The party has been under sustained pressure from the Government and the media to clarify exactly what its taxation working group, which they are setting up to combat the housing crisis, will be looking at.

Party leader Jacinda Ardern had already ruled out any taxes on the family home or the land under it, and any increases to personal income tax. 

Robertson and Revenue Spokesman Michael Wood said Labour would reverse National's proposed tax cuts and use the "billions of dollars" to make 70 per cent of families with children better off and invest more in health, education, housing and other public services.

"Our policy also cracks down on those who are exploiting weaknesses in the tax system by speculating in the housing market," they said.

"Labour will end the practice of negative gearing, and extend the current bright line test that taxes the capital gain on the sale of a property other than the family home to five years."

Tonight, from 7pm, Stuff is hosting a debate between Steven Joyce and Grant Robertson, the two blokes who want to look after the nation's bank account.

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 - Stuff