Former Revenue Minister David Parker

Labour’s political problems are not yet over with the resignation of Kiri Allan.

Not only will it take a superhuman effort to swing the political debate back to the core election issue, the cost of living, but the party must spend next weekend considering its list.

Meanwhile, it must also manage David Parker, whose relinquishing of his revenue portfolio looks likely to be a protest over the Prime Minister ruling out a wealth tax and very probably a vote of no confidence in Labour’s soon-to-be-announced tax policy.

The list ranking may see some MPs given low positions, which, given the current polling, would mean their political careers were over.

Labour currently has 64 MPs; the latest One News Verian Poll would see that number shrink to 43.

At least eight MPs are retiring, so that means that 13 others are in danger of not returning.

How they might react is a potential risk for the Government.

An indication of what happens when MPs think they have been slighted like that may have come yesterday with the announcement that David Parker had asked to be relieved of the revenue portfolio.

The official “spin” was that he needed more room to work on the transport portfolio, which he had recently acquired from Michael Wood.

But given that Parker is known to have a prodigious capacity for work, that seemed a little thin.

Advertisment

It is probably more significant that the move comes after Prime Minister Chris Hipkins ruled out any form of wealth tax as long as he is Prime Minister now and in the future.

Parker has long advocated some form of taxation on the ultra-wealthy, and he is known to have been “really pissed off” (in the words of one friend) over Hipkins’s announcement.

The timing of Parker’s relinquishing the Revenue portfolio may also be significant.

Labour is soon to release its tax policy for the election, and it would seem Parker feels unable to support that.

However, Labour’s campaign team want that tax policy to be a circuit breaker, to turn the political debate back to economic basics and the cost of living.

Parker has long spoken publicly about the unfairness of the New Zealand taxation system and frequently cited his agreement with the French economist Thomas Piketty and his work on tax inequality.

In that vein, he has introduced a Taxation Principles Reporting Bill, which Parliament’s Finance and Expenditure Committee is due to report back this Thursday.

The Bill would require the Commissioner of Inland Revenue to report to the Minister each year on income distribution and income tax paid; the distribution of exemptions from tax and of lower rates of taxation; perceptions of the integrity of the tax system and compliance with the law by taxpayers.

The report on income distribution and tax paid and the perceptions of the integrity of the tax system would be highly to feed into a perception that the ultra-wealthy were not paying their fair share of tax.

Parker indicated that much in the House in May when he introduced the Bill and referred back to Inland Revenue’s study of how much tax the ultra-wealthy paid.

“Now we have that evidence,” he said.

“Inland Revenue’s internationally ground-breaking study shows beyond doubt that New Zealand’s wealthiest citizens pay tax on their economic income at a rate less than half of what other New Zealanders pay on theirs. “

Budget documents released a fortnight ago show that Treasury and Inland Revenue had been working on addressing this issue with proposals for a wealth tax which were stopped by Prime Minister Christopher Hipkins in April.

And then, on July 12, he went further and issued a statement as Labour Leader saying: “I’m confirming today that under a Government I lead, there will be no wealth or capital gains tax after the election. End of story.”

And that must have been the final straw for Parker.

But beyond saying that Parker had wanted to lighten his workload, Hipkins had little to say yesterday about the reasons behind Parker relinquishing Revenue.

“It’s not unusual when there’s a reshuffle in the offing, that ministers will offer something up that where they’ll say, I’d like to pick this up, or I’d like to no longer be doing this,” he said.

“That happens from time to time.” 

It would seem that the political strategy with Parker was to hope that the Kiri Allan resignation — and the events leading up to it — would drown out any discussion or debate over the reasons behind Parker’s relinquishing of the Revenue portfolio.

That may well happen, but longer term, especially among the Labour Party faithful, Parker’s campaign for a fairer tax system is unlikely to be forgotten.