New Zealanders don't want the most wealthy paying less tax than lowest earners, Green Party says
The Green Party says it’s “concerning” that Labour campaigned against tax reform while knowing the wealthiest New Zealanders were likely paying less tax than the lowest income earners.
The prospect of more heavily taxing wealth became a fraught issue during the 2020 election campaign, with Labour ruling out any tax hikes beyond a new top income tax rate of 39 per cent on income over $180,000, hitting the top 2 per cent of earners.
Green Party finance spokeswoman Julie Anne Genter said new data on the tax take from the wealthy – revealed by Stuff on Thursday – showed the Government must restructure the tax system if it wants to seriously tackle child poverty – a hallmark issue of Prime Minister Jacinda Ardern’s.
“The low and middle income earners are paying a higher effective tax rate than millionaires and 100-millionaires and billionaires. I think most New Zealanders would say that's not right,” Genter said.
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“It's quite concerning that the Labour government had this data for most of 2020 ... and then still went into the election ruling out the types of tax system changes that are needed to make it fair.”
Stuff on Thursday revealed that, according to research from Inland Revenue and Treasury, the wealthiest New Zealanders pay 12 per cent of their total income in tax, on average.
This compares to the effective tax rate of 16 to 18 per cent for New Zealanders earning the median income of $55,000 to $60,000.
And 42 per cent of the wealthiest New Zealanders – or “high wealth individuals” who own or control wealth greater than $50m – paid less than 10 per cent of their total income in tax.
This was lower than the 10.5 per cent paid by the country’s lowest earners, who have incomes below $14,000 per year.
These wealthy New Zealanders tended to earn a large part of their income in parts of the economy which were lightly taxed, or not taxed at all.
The data was put together from sources including the National Business Review’s Rich List, and the Reserve Bank’s household balance sheet.
Finance Minister Grant Robertson on Thursday, in the House, said the research had provided an “experimental estimate of effective tax rates for a sample of people”.
“The Government continues to work on making New Zealand's tax system fairer ... The Government has very clearly ruled out a comprehensive capital gains tax and a wealth tax.”
He said it was important to make sure people were meeting their tax observations, and “we have resourced the Inland Revenue Department to do more work to ensure that that happens”.
Genter, speaking to Stuff on Friday, said short-term political considerations must be cast aside.
She said the wealth tax the Greens campaigned on – one per cent on any net wealth of over $1 million and two per cent for assets over $2m, affecting an expected 6 per cent of Kiwis – would ensure fairness in the tax system.
"We're not going to stop talking about that just because the Labour Party has decided that it's politically too difficult for them to talk about tax change,” Genter said.
“If they believe in addressing inequality and solving some of our greatest challenges around child poverty and climate change they have to tackle this issue, and the data gives them the ammunition to be able to make the case for these changes.”
The Green’s wealth tax policy was rejected outright by Labour during the 2020 campaign, as National continued to suggest Labour would bring about such a tax after the election.