This year's Budget will not include a wealth tax, capital gains tax or a levy to help pay for the recovery from Cyclone Gabrielle, Prime Minister Chris Hipkins said.
In a pre-Budget announcement in Auckland today, Hipkins said the Government had ruled out a specific cyclone levy in the Budget, with recovery instead funded mainly from within the Budget's operating and capital allowances, savings and "reprioritisations".
It would also be funded by "some debt as we invest in infrastructure repairs and build back stronger", he said.
"There will be no new tax everyone would have had to pay, like a cyclone levy, to fund the recovery.
"This will be an orthodox no-frills Budget focused on funding the things most important to New Zealanders like support with the cost of living and cyclone recovery. There will also not be any major new tax changes like a wealth tax or CGT."
He said the Treasury estimated the cost of asset damage from the Auckland floods and Cyclone Gabrielle as between $9 billion and $14.4b — something he said was more than the Kaikōura earthquake but substantially less than the Canterbury quakes.
"We're confident we can fund the recovery within the allowances without a one-off cyclone levy.
"Half of the total estimated costs relate to 'public infrastructure' — assets owned by central and local government such as roads. The bill for these assets is usually spread over a longer period, so it is appropriate to do so for this.
"A key message of this Budget is restraint. In a cost-of-living crisis, now is not the time to be asking Kiwis to pay more though a levy for cyclone repair costs."
He said the Budget would contain three areas of investment to "lay the foundation for future growth and improved productivity". They were skills, science and technology, and infrastructure.
"These three areas will all receive extra support in the Budget.
"They are areas I have a personal interest in and reflect where I think there are real opportunities to lift our economic performance.
"There's no point getting through the challenges of today if we don't have a plan for the future. Rather than a long laundry list of worthy ideas, I want the Government to do a small number of things very well."
He said that small number of things needed to focus on growing the economy.
Yesterday, Inland Revenue released a report into how much tax the super-wealthy paid on their whole income — which includes capital gains, business and other investments as well as salaries and wages. It found the group studied — 311 families, mostly with a net worth of $50m, paid an effective tax rate of about 9.4%, when GST was included.
Treasury simultaneously released an analysis on how much tax ordinary New Zealanders paid on their whole income, including GST. It was found to be about 20.2%.
The results prompted the Greens to renew their call for a wealth tax or capital gains tax, while National and ACT both said the tax system was not the issue, but the Labour Government's handling of the economy.
Budget day is on May 18.
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