The recent announcement by the Labour Party with regard to its taxation policy for the general election is to be welcomed.  In a nutshell the policy is an attempt to tax capital, hence the rich.

The outline of the policy is thus:

  •  Capital Gains Tax (CGT) on property (other than the family home), shares and other capital assets. Earthquake ravaged Christchurch in the CERA zone to be exempt for 5 years.
  •  39% top rate of income tax for all earning above $150,000.
  •   First $5,000 earned will be free from income tax.
  •  GST taken off fresh fruit and vegetables.
  •  Minimum Wage of $15 / hour.
As socialists we support any measures which help redistribute income and wealth to the average working class family.  However, the above measures do not go far enough and are very timid indeed.


The right-wing Labour leaders have positioned this policy as an alternative to the Nats selling off state assets / slashing public services and as a way of reducing government debt. 

The Labour Party leadership are selling this policy from an uninspiring 'fairness' point of view devoid of any real class content.  The Labour leaders also hope by taxing the rich they can avoid further cuts in public services and address the issue of unemployment.

The problem for the Labour Party right-wing leadership is that whilst their intentions are probably well meant, it will not deal with the fundamental problem of the capitalist system itself, as this will remain intact under the next Labour government if elected in November.

Socialist Appeal has explained on a number of occasions that the crisis we face in New Zealand and the rest of the World is not a crisis of the banks and financial institutions but that of a crisis of the capitalist system itself. 

Therefore, if the Labour Party is elected in November, and attempts to carry out its policies within the confines of the capitalist system it will be thrown off course very quickly.  It will adopt the same policies as its sister social democratic parties in places like Greece and Spain. 

These  policies will be the polices of counter-reforms as the capitalist system can no longer afford the reforms won by workers in the past. 

We cannot expect that the measure announced, by the Labour Party on taxation, to seriously address the issues faced by workers.  Most analysis expect workers on the average wage to be about $10 a week  better off. It will not provide enough income to the government to significantly improve public services or stop their further decline.

What the Labour Party in government will be faced with is a strike of capital as the bosses attempt to undermine any such  wealth taxes through not investing and hence create more unemployment.  At the same time such a strategy will be used by the bosses to discredit socialism.

Taxing the rich and sharing out the wealth equally is highly Utopian ideal under capitalism. The only alternative is to develop a socialist economic policy.  This means nationalisation of the big monopolies and financial institutions in New Zealand and instituting a socialist plan under the democratic control of the working class. 

Only when rational planning and production for need is introduced with the active participation of the working class  can long lasting meaningful reforms be sustained. 

Bold socialist policies are urgently needed if Labour is to win the general election.