Half NZ's super-rich dodge tax
Inland Revenue has found only half of wealthy individuals worth more than $50 million each are paying the top personal tax rate, despite Government moves to combat tax avoidance.
There are about 250 New Zealanders with wealth in excess of $50m, deemed "high wealth individuals" by Inland Revenue.
New figures obtained under the Official Information Act show a sample by Inland Revenue of 184 of those individuals, taken between 2009 and 2011, found 49.5 per cent had declared they had earned $70,000 a year or more. The rest declared they earned less. Those who earn more than $70,000 are in the top tax bracket and pay 33 cents tax in the dollar.
The figure has fallen slightly from the Inland Revenue's previous sample, taken between 2001 and 2008, which found 50 per cent declared they earned enough to put them in the top tax bracket. The top tax bracket over that period kicked in at $60,000 and paid 39 cents tax in the dollar.
Concerns about the rich avoiding the top tax rate through income sheltering devices such as family trusts were raised in a 2010 report by the Tax Working Group.
Later that year, the Government took steps to reduce tax sheltering by reducing the top tax rate from 39 per cent to 33 per cent to align it with the tax rate for trusts.
Greens co-leader Russel Norman said the new figures showed the changes had no effect on the amount of income tax some wealthy people were paying.
It comes at a time when inequality in New Zealand has hit record levels. A report released last week by the Ministry of Social Development found wages of low-income earners fell between mid-2009 and mid-2011, while high-income earners' pay increased.
Norman said middle New Zealand, who paid the bulk of tax, was "in the gun" under the National-led Government.
The 2010 tax changes had given more money to the wealthy, not low and middle income earners, he said. "Yet here we see a proportion of the very wealthy are cheating on their taxes."
Council of Trade Unions economist Bill Rosenberg said tax avoidance was a worldwide issue which had led to the loss of more than $3.1 trillion in annual tax revenue.
“If governments internationally, including New Zealand, could do more to track down dodged taxes we might not be facing the degree of financial austerity and government cuts that we are seeing around the world."
Revenue Minister Peter Dunne said the figures did not include tax that may have been paid on income from trusts and dividends.
Sunday Star Times