Sallies call for middle class to pay more taxes

Major Campbell Roberts New Zealand should also abolish tax on the first $5000 or $10,000 of income. Photo / Janna Dixon

Salvation Army's social policy unit head wants lift in minimum wage to match those in Australia

The middle class will have to pay more for their daily espresso and higher taxes if New Zealand is to become a more equal society, the Salvation Army says.

Major Campbell Roberts, who heads the army's social policy unit, said middle-class New Zealanders gained from the country's low minimum wage of just $13.50 an hour every time they bought a coffee from a low-paid cafe worker.

"Many of the lowest wages are in service sectors and benefit high-income people," he said.

"The minimum wage should be raised to be commensurate with Australian levels for the lowest-paid work. The Government should budget for higher minimum wages and be upfront that the extra costs will be met from higher taxes and that high- and middle-income earners should expect to pay a little more for their espresso coffees."

Australia's minimum wage is A$15.96 ($20.31) an hour. However, for a 40-hour week this is actually a slightly lower proportion (47 per cent) of Australia's average wage than New Zealand's minimum wage is of our average wage - 53 per cent.

Major Roberts was speaking yesterday at a national summit on inequality at Mangere's Nga Whare Waatea Marae organised by the Council of Christian Social Services and Closing the Gap, a network co-founded by actress Robyn Malcolm's father, retired Tauranga principal Peter Malcolm.

Mr Malcolm said the meeting aimed to build a national coalition of groups around the idea promoted by the British book, The Spirit Level, that everybody - the rich as well as the poor - had better health and wellbeing in more equal societies.

Major Roberts made the same point, arguing that crime was not caused by poverty but by gross wealth alongside poverty. He quoted the Catholic saint Mother Teresa, who said the worst poverty was not hunger and homelessness but "the poverty of being unwanted, unloved and uncared for".

"The poverty that we are looking at when we see unnecessary deprivation in New Zealand is basically a poverty of compassion. We don't care enough," he said.

He said New Zealand was now one of the most unequal developed countries, with a disturbing ethnic divide. Pacific children were 50 times as likely as Europeans, and Maori children 23 times as likely, to get rheumatic fever because of cold, damp and overcrowded houses. A quarter of all male Maori spent time in the Corrections system.

He said a big rise in the minimum wage between 2000 and 2008 did not cause higher unemployment, and raising the minimum further would be an effective way to lift the incomes of large numbers of workers.

He said New Zealand should also abolish tax on the first $5000 or $10,000 of income, following Australia which tripled the tax-free threshold in this year's Budget from A$6000 ($7640) to A$18,200 ($23,200).

Tax breaks for the poor had to be funded by higher taxes on middle and higher earners. "That has to be based on the expectation that the well-paid and wealthy will pay more tax."

He also called for a major house building programme and a universal child benefit.

How we compare

New Zealand

Minimum wage - $13.50 an hour

Tax on first - $14,000 10.5 per cent

Top tax rate on rich - 33 per cent

Australia

Minimum wage - A$15.96 an hour

Tax on first A$18,200 - Nil

Top tax rate on rich - 45 per cent