The Greens have renewed their calls for a wealth or capital gains tax following a report which found the wealthiest New Zealanders pay less than half the tax rate on their whole income than other earners.
National and ACT say the report's findings are the result of Labour's policies, rather than the tax system.
The report, by Inland Revenue, was published today alongside a contrasting Treasury analysis on how much tax ordinary people paid on their whole income.
Whole income refers to income from all sources - not just directly taxable income such as salaries and wages. Other income sources include income from property, businesses and other investments.
Inland Revenue's report found when GST was included, the richest New Zealanders paid an effective median tax rate of about 9.4%, while Treasury's analysis found other earners paid 20.2%.
That meant the wealthiest individuals paid less than half the tax - as a proportion of their income - of other Kiwis.
Green Party revenue spokesperson Chlöe Swarbrick said the rules put in place by successive governments had privileged "wealth-hoarding".
“Not only are these rules unfair, they’re counterproductive and starve our health, education, transport and social services. They privatise profit and socialise cost."
She said political willpower was the only thing in the way of a fair tax system, well-funded public services and ensuring everyone had what they needed to survive.
“To allow millionaires to continue to not pay their fair share after this explosive evidence is a political choice. Poverty is a political choice."
Swarbrick said the tax system "supercharges inequality".
“The question now is whether the Government will act."
The Greens supported a capital gains tax or a wealth tax, she said.
"The evidence today continues to make the case crystal clear."
National Party finance spokesperson Nicola Willis said the reports showed Labour's "economic mismanagement" had hurt everyday New Zealanders while the rich got richer.
She said they highlighted the impact of Labour's "sugar-hit economics".
“The Government’s decision to embark on a money-printing, borrowing and spending frenzy has led to massive capital gains for some, at the expense of everyday workers.
“That’s not a result of tax policies, it’s the result of Labour’s deliberate monetary and fiscal policy decisions.
“The IRD research shows that in 2017 the wealthiest New Zealanders made economic income of $1 billion. However this soared to a staggering $14.6 billion in 2021 as Finance Minister Grant Robertson’s policies took hold.
“This is the direct result of the Government’s decision to allow the Reserve Bank to print tens of billions of dollars through its extended quantitative easing programme and the massive blow out in its own spending, up $1 billion a week since Labour came to office."
She said National continued to oppose a capital gains tax, saying the solution to economic problems was not more tax.
"The solution is a government that will bring spending under control and demand more accountability from agencies including the Reserve Bank and that will allow lower and middle-income earners to keep more of what they earn.”
ACT leader David Seymour said the Government would try to "leverage" what came out of the report into a "reason to take more money from Kiwis".
“Unrealised capital gains are profits that exist on paper in the theoretical possibility the assets are sold, but not in reality. the report can’t be taken seriously if hung off such a concept.
Seymour said the study was a "politically-driven fishing expedition" to find people with money and take it from them.
"People should ask themselves, would they accept a Government that used such intrusive powers to find out what beneficiaries spend their money on, or middle income households? Why, then, is it OK to go after people if they have money? How, then, does it fit with Kiwi values to only go after people if they’re successful?
“We tell kids to listen to their teacher, work hard, get good grades so they can get good jobs, save their money and invest wisely. Labour says if you do all that we’ll tax you harder. It is tall poppy syndrome in the tax code."
"The issue isn’t tax revenue, it’s wasteful government spending.
“We need to put the values of aspiration in our tax system, making it fairer, simpler and more competitive. It’s not only possible, it’s essential.”
The Opportunities Party calls for tax-free first $15,000
NZ Council of Trade Unions economist Craig Renney said the IRD data backed up what most New Zealanders have known for a long time.
“Most New Zealanders pay tax on every dollar that they earn, whereas the wealthiest are paying no tax on large parts of their economic income. Not only is that unfair, but it also means that the government is potentially missing out on billions of dollars in taxation. That places a greater burden on families who are just trying to get by.”
“This data demonstrates the urgent need for transformation of New Zealand’s tax system and in the wider economy. Our tax system increasingly looks neither efficient nor effective.
“We all need to ensure that the very wealthiest are paying their fair share. That would not only benefit the Government, but the economy would also benefit too.”
Opportunities Party Raj Manji said his party advocated for the introduction of a tax-free threshold of $15,000, and replacing current tax thresholds in exchange for a land value tax of 0.75% of the value of urban residential land.
He said it would deliver $5.8 billion in income tax cuts.
He said until there was tax on unearned gains in land prices there would be a continuation of a wealth gap between the rich and other earners.
At a speech at Victoria University at midday, Revenue Minister David Parker said the report provided "hard data confirming fundamental unfairness in our tax system".
He said the Government was working on "a series of tax principles", which would require tax policy officials to regularly report on "key fundamentals of the tax system".
However, he said several times he would not announce any tax policy today.
Speaking to reporters after the event, he said he had "some very successful friends".
"I really like these people, I'm not attacking them."
A study, released last week and which was carried out by tax consultancy OliverShaw, concluded the rich in New Zealand paid most of the tax collected, and the higher their income the more they paid. It found the least well-paid often effectively ended up paying less because of the various tax credits and other payments they received.
OliverShaw provides tax advisory services to corporate clients and high net worth individuals, according to its website.
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