John MacDonald: Wealth tax would be a waste of time

It’s often said that marketing plays on people’s fears.You know what I’m talking about - things like those ads on TV that talk about the house being full of bacteria we can’t see and if we really want to be good parents and keep our family safe we should be spraying this or spraying that on every surface every five minutes.Create the fear and present the solution. All in 30 seconds.Elections are the same. Politicians love to get us all worried about something. Even better if they can get us worried about a whole lot of things.Think back to the last election when some voters were apparently so terrified about the Greens getting into government that, instead of voting for National like they normally would, they voted for Labour which, as we know, walked away on election night with a landslide victory.And so we have it that, more than a year away from the next election, some political parties are already trying to get us all scaredey-cat about taxation.It’s come to something of a head in the past 24 hours after Prime Minister Jacinda Ardern got herself well-and-truly tied up in knots yesterday when she was interviewed about taxation.She was asked if she stood by the reassurance she gave back in 2020 that a wealth tax would not be introduced while she was Prime Minister or, whether she had gone back on that and Labour would be including a wealth tax in its policies for next year’s election.Even if you’d wanted to believe her, she was pretty unconvincing - dancing on the head of a pin as politicians always do - going on about the need to review taxes and work out whether everyone is paying as much tax as they should.And then going on to say that Labour hasn’t even worked out its tax policy for next year’s election.As I say, pretty unconvincing. And, not surprisingly, it’s been interpreted - and portrayed by some - that she’s about to do, or has done, some sort of U-turn on her previous reassurances that a wealth tax will not happen “on my watch”.The National Party and the ACT Party have jumped in boots-and-all because the Prime Minister has given them the perfect opportunity to do what politicians do best.They love us being scared about anything and everything, because that’s how elections are won and lost.“If you’re not scared about this, you should be. And then, once I’ve convinced you to be scared about it, vote for me - because you won’t need to be scared anymore’.And so today it’s taxation and, in particular, whether or not Labour has plans to introduce a wealth tax.There were two interviews on the Mike Hosking Breakfast this morning - one after the other - that I thought highlighted a problem and delivered a potential solution.The problem was the lack of money in this country to get our infrastructure up to scratch. The potential solution was the wealth tax idea.And, on the face of it, I thought ‘yeah, more revenue for the government, more money to spend on infrastructure’.But then I read of a report by the OECD done back in 2018 which said wealth taxes do not collect as much revenue as you might think, because property values can go down, and people go to great efforts to avoid them. The OECD wasn’t making this up, it said this because it’s seen it happening in countries that already have wealth taxes.Another issue too pointed out by the OECD is you can be rich on paper, let’s say via having a highly-valued house, but that doesn’t mean you have a truckload of money to splash around.And so that’s why I think introducing a wealth tax here in New Zealand would just be virtue-signalling, and the level of bureaucracy that would be required to make it work, and the effort that would have to go into it wouldn’t be worth the return the government might get.Put simply, I think it would be a waste of time.See omnystudio.com/listener for privacy information.