Shaneel Lal: Election 2023: We need a radical shift in our tax system

Chris Hipkins and Christopher Luxon in the first Leaders' Debate. Photo / TVNZ

After watching the first leaders’ debate, one thing became clear to me: neither Chris Hipkins nor Christopher Luxon is going to do anything radical to alleviate the collective suffering of New Zealanders.

The most pressing issue affecting most New Zealanders is the skyrocketing cost of living, particularly the rising prices of rent and groceries. Neither Luxon’s tax cuts nor Hipkins’ GST removal from fruits and vegetables will help low-income New Zealanders keep up with the increasing costs.

We need a radical shift in our tax system. Enter wealth tax. New Zealand’s two major parties, Labour and National, have ruled out a wealth tax despite a poll finding that 53.1 per cent of New Zealanders support one and only 34.7 per cent oppose one.

New Zealand is one of the wealthiest countries in the world. Our country has enough wealth to ensure everyone has the necessities, yet we don’t. That is a result of political choices that overwhelmingly favour the wealthy to garner more wealth while people on lower incomes pay higher tax rates.

The wealthiest 10 per cent of New Zealanders hoard 50 per cent of New Zealand’s wealth, while the bottom 50 per cent have only 2 per cent. What’s more unjust is that New Zealand’s 311 wealthiest families pay less than half of the tax rate of most New Zealanders. The 311 wealthiest families pay a median effective tax rate of 9.4 per cent, compared with 20.2 per cent for “middle-wealth New Zealanders”.

Conservative parties have portrayed attempts to legislate a wealth tax as jealousy. I am not jealous. I am angry that I and many other students like me pay a higher proportion of our pay to tax and are barely getting by while New Zealand has become a tax haven for the wealthiest. A wealth tax reinstates fairness.

Act does not support a wealth tax.

The Greens are campaigning to introduce a 2.5 per cent wealth tax on net assets. Couples who jointly own assets will only pay the wealth tax on assets above the $4 million threshold, less mortgages and other debt.

Individuals will pay the wealth tax only on assets above $2 million. The Greens estimate their wealth tax will raise at least $12 billion in the first year.

The Māori Party is campaigning to introduce a 2 per cent wealth tax for net wealth over $2 million, 4 per cent for net wealth over $5 million and 8 per cent for net wealth over $10 million. These rates will be less mortgages and other debt and will be for individuals and the combined net wealth of couples. The Māori Party estimates their wealth tax will generate $23 billion annually.

The Greens are proposing a tax-free bracket of $10,000, while the Māori Party is proposing a tax-free bracket of $30,000. Both parties propose lowering the tax rate for middle-to-low income earners. Middle and low-income earners will keep more of their money when the wealthy pay their fair share of the tax.

Hipkins warned minor parties to “be careful” with their demands earlier this year. Labour needs to snap back to reality from its 2020 utopia. They once filled Parliament with more than 60 Labour MPs, but that won’t repeat in 2023.

Labour sold out the many middle and low-income earners to suck up to the wealthy few.

The wealth tax has been the Greens’ leading election policy, and Māori Party co-leader Debbie Ngarewa-Packer has revealed a wealth tax is the Māori Party’s bottom line. If Labour wants to get back into government, it will need a coalition with the Greens and the Māori Party.

New Zealand is built on the backs of people struggling to make ends meet. It is time for the wealthy to carry their share of the burden.

Shaneel Shavneel Lal (they/them) was instrumental in the bill to ban conversion therapy in New Zealand. They are a law and psychology student, model and influencer.