It was the best of taxes; it was the worst of taxes…

What the Dickens, you may be wondering? Well, two government task forces have been the focus of much attention this week: the Don-Brash led 2025 Commission and, today, a conference on the issues raised by the Tax Working Group.

Conventional wisdom might have the 2025 report, with its suite of proposals urging the government do a whole lot of things the government has ruled out (cutting welfare entitlements, asset sales, etc etc) is embarrassing for the government. The corollary of this being the more measured approach taken by the far less political Tax Working Group, will be less of a problem.

That’s quite wrong. Don Brash’s team did very well yesterday, and pretty much everyone concerned has come away with a win.

The government – well, the parts of it that are not National or Peter Dunne or the Maori Party – gets to look sensible and moderate and not dedicated at all to turning the place upside down.

Act gets to feel macho and principled and gets a nice thick report to beat John Key and Bill English over the head with. And there is no risk of it having to deal with the tricky business of actually implementing the report’s more radical proposals.

So that’s a win all round for the government parties.

They got the bonus of upsetting a whole heap of groups they are quite happy to see upset. The art of politics sometimes isn’t pleasing the right people: its annoying the right people, and by that yardstick the 2025 Commission hit the bullseye.

The government’s opponents, both inside and outside Parliament, also get plenty. The teacher unions have spent the last few years reading their children horror stories about the Don Brash bogeyman and they now have a new text to work from.

Labour has a useful tool to energise its base with – and, for once, it doesn’t involve any unprincipled and desperate U Turns.

The Tax Working Group’s conference today in Wellington is likely to have less happy outcomes. It is far more likely to be a case of annoying the wrong people. 

Most practitioners agree the tax net is broken: they all though differ on just which parts are broken.

Finance Minster Bill English said he would make any changes in his 2010 Budget, and also ruled out only one change – a capital gains tax.

The more controversial options put up this far are a land tax – which National will implement around the same time Satan is installing an ice-skating rink; putting up GST, which looks less unlikely and would require further adjustments at the lower end – probably making Working for Familles even more aggressive.

The only sure fire thing is some sort of limitation for the losses property investors can claim – either through capping the amount they can claim or simply abolishing the depreciation for residential property completely.

Oddly enough, the one tax goal the government has explicitly endorsed – aligning the top personal rate with the company and trust tax rates at 30% – now looks shakier than it did.

The difficulty is it may not last long: if Australia drops its company tax rate to 25% (which is not unlikely) New Zealand is again an outlier. And cutting all three rates to 25% would not be feasible without more political daring than this government has thus far shown.