Revenue Minister David Parker is proposing a new bill - called the Tax Principles Act - aimed at creating a fairer tax system.
Revenue Minister David Parker Photo: RNZ / Angus Dreaver
A group at Inland Revenue is collating previously unknown data on how much tax the country's wealthiest people pay.
Speaking at Victoria University today, David Parker said the bill he was bringing forward would require regular reporting on the tax system, because it was about time it became more transparent.
"How can voters assess who is right and why can't we prove it? ... only IRD can gather the data needed and now for the first time in our history they are," he said.
"It beggars belief that we currently do not know what rate of tax is paid by the top cohort in New Zealand ... we do know the rate paid by wage and salary earners, and by small business owners."
He said he tax debate in New Zealand had become mired in controversy, and opponents to change "can get away with wrongly alleging that tax changes are a tax grab, rather than a change to the mix of taxes. This happens even if there is no change to the total tax collected and even when change is obviously needed".
New Zealand had poor data on distribution of wealth and capital income as well as the impact of GST rates on New Zealanders, he said.
"GST is really paid out of our earnings when we spend them. In economic terms GST is mainly a tax on labour - who bears that cost? ... we really don't know this very accurately by either income or wealth decile, particularly at the top end."
Parker said he was enjoying the political debate, but what was needed was a fact-based discussion, so he would like to see legislation passed before end of the parliamentary term.
In a statement, the Green Party's finance spokesperson Julie Anne Genter called for the government to go further.
"Most New Zealanders want the wealthiest to pay their fair share of tax so we can fund strong public services and ensure those with the least have enough to live on," she said.
Green Party Finance Spokesperson Julie Anne Genter Photo: RNZ /Dom Thomas
Research by Inland Revenue and Treasury suggested the wealthiest New Zealanders paid just 12 percent of their income in tax, she said.
"This is partly because we tax income from work, but we don't tax wealth. Wealthy individuals get their income from untaxed or lowly taxed sources.
"The most straightforward solution is to introduce a Capital Gains Tax or a Wealth Tax on individuals' net wealth over $1 million - not including mortgages and other debt. This would only apply to the wealthiest six percent of New Zealanders.
"Putting in place a Capital Gains Tax or a Wealth Tax will remove the tax-favoured status of investing in property, which will also help with inflation. The government does not need to wait until research is completed next year before deciding what needs to change."
ACT leader David Seymour said Parker's speech suggested Labour was "planting the seed for increased taxation to fund their addiction to spending".
ACT leader David Seymour Photo: RNZ / Angus Dreaver
"While talking about how 'unfair' our tax system is, the minister failed to acknowledge the government has taken in a massive $14 billion more in income tax revenue than expected due to record inflation," he said.
"Everything this Labour government does is either about taxing and redistributing or dividing us against each other. There is a better way."
He said ACT would cut the income tax for earnings above $70,000 from 30 percent to 17.5 percent, and remove the higher tax rate of 39 percent for earnings above $180,000.
