The National Party leader has again defended rich New Zealanders after calls to introduce a wealth tax or capital gains tax, as two new reports found the richest Kiwis effectively pay lower rates of tax than other earners.
Christopher Luxon said he would instead give a tax break to working New Zealanders, funded by cutting Government spending and managing the economy better.
"I'm saying that the main task of this government should be on running this economy properly and not trying to blame the rich for the problems that they've got with the economy at the moment," he told Breakfast.
"We think there's a huge amount of waste in the government spending at the moment. We're gonna go through line item by line item."
Earlier, he said: "It's not the wealthy that are the problem here, the problem here is the Government."
Yesterday, Inland Revenue (IRD) and Treasury released the findings from two inquiries looking at how much tax high-wealth individuals pay across all income sources, and another on what the general population pays.
Treasury found the general population pays an effective 20.2% tax rate across all income sources. The IRD found that high-wealth individuals, by comparison, pay about 9.4%.
A study gathered information from 311 families worth more than $50m each. (Source: 1News)
In response, Luxon said today that National was the only party committing to give a tax cut to middle New Zealand.
"We're the only party offering them a tax break. And it's important because the middle-income and middle-income earners in New Zealand cannot get ahead," he said.
"They work incredibly hard. They have good jobs, average incomes can't get ahead, and that's why we need a proper economic plan to run this country."
Meanwhile, the Green Party used the report's release yesterday to double down on its calls for a tax on wealth — saying that the rich had heavily profited off the pandemic economy.
The party's finance spokesperson Chlöe Swarbrick said: "Let’s be clear: to allow millionaires to continue to not pay their fair share after this explosive evidence is a political choice. Poverty is a political choice."
In contrast, the National Party leader said a slowing economy, inflation, and rising food prices were "irrelevant" to how much wealth rich Kiwis had.
The National leader said the Government's economic management was to blame. (Source: 1News)
"How much the wealthy own or don't own is irrelevant to actually middle New Zealand who are really struggling with rising inflation, rising interest rates and a slowing economy and rising food prices," Luxon told Breakfast.
"You know, I was on a budgeting session with a family who are at risk of losing their homes. What happens here with the wealthy and what they do or don't don't doesn't impact on that."
Speaking to RNZ, Luxon said the tax system was "broadly fair" after persistent questioning. Yesterday, he was challenged by reporters and refused to give a conclusive answer on the topic despite repeated rounds of questioning.
When directly asked by Breakfast whether the tax system was fair, he said: "The real question here is what's the point of David Parker's speech and all these reports yesterday, and I can tell you what the point is — they want to shape for capital gains tax and Chris Hipkins is sitting on the fence, not ruling it and not ruling it out."
He yesterday accused the Government of "softening us for a tax grab".
'Groundbreaking' report sees focus turn to tax - expert
Tax consultant Terry Baucher told Breakfast that the reports were "honestly groundbreaking" as previous surveys were based on self-selecting samples or guessing based on sources like the NBR Rich List.
"There's a provision that says that ministers and officials are charged with preserving the integrity of the tax system, and critically people's perception of the integrity of the tax system."
He reiterated the differences between taxable income and economic income, including unrealised capital gains on housing.
The tax consultant suggested a capital gains tax, wealth tax, land value tax, or an inheritance tax were potential policy options that could help address perceived unfairness in the system.
"In some ways, the tax we have on what we call Foreign Investment Funds is a de facto wealth tax — it's 5%. And KiwiSaver funds pay that on your overseas investment," Baucher said.
"The economists all like [a land value tax] because it's very efficient and encourages people to use their land properly."
The IRD and Treasury reports are expected to help "identify the dirty little secret" of our richest families, Bernard Hickey says. (Source: Breakfast)
The Government's Tax Working Group recommended introducing a capital gains tax in 2019, but was categorically rejected by Jacinda Ardern — who vowed to never introduce the tax under her prime ministership.
SHARE ME