Sigh: captial gains and the issue of trust

I keep looking at the Capital Gains Tax (CGT) debate and, as an outsider to tax policy, I just get more bewildered, as I think the issues are trust in competence and maturity, not the mechanics.

A CGT would be a lot simpler if successive governments' behaviour hadn't painted us in to a corner. The nuts and bolts of tax reform itself are likely a smaller problem than our political behaviour and consequently diminishing public belief in the state's competence.

To get public consent to broaden the tax base, the citizens need to be convinced that the money will be spent intelligently, effectively and efficiently by government. The roster of failed, failing or vastly over budget public projects, as well as the public service's previously huge growth, don't give evidence of that. There may be a lot of resistance until that trust in probity can be established and where it is believed government is up to the task of managing our money.

The idea of redistribution of wealth via the state also struggles for the same reasons. Scepticism of competence, issue politicisation for other ends, reflexive adversarialism, our addiction to 'strong' leadership, the inability to compromise and negotiate like grown-ups... It all demonstrates that we are in no way a mature country.

Some of the specific problems -

Property capital gains are what a lot of people are relying upon for their retirement savings and have calculated return on the current regime. Taxing them suddenly is potentially going to leave a fair number of older people short on their retirement, meaning there's going to be a greater reliance on a state that can't afford it.

People have mortgaged themselves to the eyes for an asset that while it has tax advantages is also concrete and can't be lost via theft or negligence: there is a lack of trust in state and financial institutions that would encourage investment rather than speculation on property.

Financial education has never been promoted: it's like there's been a conspiracy of silence to make sure the majority of people don't have even a basic understanding of money. It's cast by the educational establishment as though knowing about money is a bit distasteful - an arrangement that works well for the cognoscenti in government, banks and financial services industry.

Our investment environment is a mess: there is little capital for productive enterprises as it's largely been hoovered up by the property market and our amateurish investment management is expensive and under-performing. We have a long way to go to building up a mature investment environment to replace buying and selling houses.

Some of the proposals for CGT from some give the appearance of wanting to double-tax investments: at source and then on draw-down or as part of personal wealth if you invest well and save hard. There needs to be a lot more clarity and consensus to give stability and avoid the perception of disincentivizing thrift and other useful behaviour like investing in the country's enterprises. Given the reflexively adversarial nature of our politics that is likely the biggest stumbling block to tax reform.