While Te Pāti Māori’s plan is light on some specific details and exact costings, the ideas are sure to send a rocket under Labour as it comes under pressure over its own tax policy, which is understood to be released imminently.
Already National and Act have come out firing, the former claiming the plan was “Labour Party policy by stealth” and the latter arguing tax rates would mean no one doing business with New Zealand leaving a “$30 billion hole”.
Te Pāti Māori co-leader Debbie Ngarewa Packer deferred when asked if any policies would be a bottom line for the party, instead stating their bottom line was to “end poverty”.
She indicated elements of the policy however - such as a wealth tax - were likely to be integral parts of negotiations with any party that wants to work with them after the October 14 election.
The tax plan comes at a particularly contentious time for the Labour Government, with the Greens over the weekend doubling down in their bid for a wealth tax, saying Hipkins’ rule-out of both a wealth and capital gains tax was meaningless if voters wanted them.
Hipkins has said he wouldn’t budge, responding that the two smaller parties - which Labour would most likely need to work with to form a government - were “welcome” to try to get such a policy over the line without Labour’s support.
But that rule-out has also proved unpopular within his own party, with David Parker this week stepping down as Revenue Minister saying it was “untenable” for him to continue in the role with him supporting a wealth tax.
Parker, one of the chief architects of Labour’s tax proposals - including conducting a ground-breaking study on how much tax the wealth paid - had publicly expressed his disappointment following Hipkins’ decision not to progress work on a potential wealth tax and CGT as part of a tax switch in Budget 2023.
Te Pāti Māori co-leader Rawiri Waititi said the tax system currently was unfair and doing what it was designed to do: take money from the poor and give it to the rich.
“The richest 10 per cent now own half the wealth in this country, while the poorest half owns a mere 2 per cent.
“On top of that, average people in Aotearoa are paying 20.2 per cent in tax while the wealthy are only paying 9.4 per cent - it’s time we rectified this imbalance,” said Waititi, citing the very study Parker had conducted that found 311 families owned more wealth than the bottom 2.5 million New Zealanders combined and paid less tax as a proportion of their income than average.
The wealth tax rates would kick in at 2 per cent for anything over $2 million, 4 per cent for anything over $5m and 8 per cent for anything over $10 million. It says this would net $23b.
These rates will be less mortgages and other debts owing and will be for individuals and the combined net wealth of couples.
The party says these rates would not affect most family homes or retirement savings. The tax would be payable annually and would capture capital gains accrued.
The party proposes shaking up income tax rates, with a tax-free threshold to $30,000, 15 per cent on further income up to $60,000, 33 per cent on income above that to $90,000, 39 per cent on income above that to $180,000, 42 per cent up to $300,000 and a new rate of 48 per cent for any income over $300,000.
These changes were costed at $13.7b.
The party also proposes increasing the Corporate Tax Rate from 28 per cent to 33 cent that it says will net $3.5b, a Foreign Companies Tax, a Land Banking Tax and a Vacant House Tax - the latter two aimed at reducing homelessness.
It came alongside the revival of the party’s policy to remove all GST from all food, which it says would cost $3.4 billion.
It would also target tax evasion, pumping $500m into the Serious Fraud Office to help it recoup the estimated $7b lost in tax evasion each year.
The party estimated the changes overall would mean an increase of $16.4b in government revenue.
The party said the estimates were developed by economic advisers using models from the Parliamentary Library and data from IRD, Stats NZ, the Tax Working Group, and Treasury Budget advice.
The Green Party meanwhile has also proposed a tax-free threshold on earnings under $10,000, increasing the rate for earnings over $180,000 to 45 per cent, and a 2.5 per cent wealth tax on net assets over $2m for an individual and $4m for a couple.
When asked about these policies today, Prime Minister Chris Hipkins declined to go into detail stating Labour would soon release its own tax plan. He repeated his rule out of a wealth tax and said if that was their bottom line they would need to find another party to support it.
National meanwhile was not buying that response, with campaign chair Chris Bishop saying Te Pāti Māori’s policy was “Labour Party policy by stealth”.
He called it a “radical high-tax agenda” that would “send a wrecking ball through New Zealand’s economy”.
Act leader David Seymour said the top wealth tax rate of 8 per cent was more than double the highest comparable wealth tax and amounts to the annual return of the NZX50 for the last ten years.
“If every dollar of return were to be taxed, there would be literally no reason to invest in New Zealand. Forget banks, forget infrastructure – New Zealand would be economically decolonised.”
He said that meant that overall plan was “built over a $30 billion hole”.
He also said he was sceptical of $7b tax evasion figures and warned other taxes could see costs simply passed onto consumers.
