Revenue Minister David Parker says the tax report is not an excuse to attack the rich. Photo: RNZ / Samuel Rillstone
Political parties are using the recently released tax reports on New Zealand's wealthiest to outline their views on capital gains tax once again, as well as their own promises, ahead of elections this year.
The Inland Revenue report, titled High Wealth Individuals Research Projects, has found the effective tax rate for the wealthiest New Zealanders is less than half that of the average person - with untaxed capital gains the largest driver of the disparity.
Treasury also released research and analysis into the effective tax rate of all New Zealanders across income and wealth distributions.
Revenue Minister David Parker insisted the report was not an excuse to attack the rich.
"The excellent work in this survey will enable future discussions on tax policy to be based on solid evidence," he said.
Speaking to Morning Report before the release of the report, Prime Minister Chris Hipkins said the government would not be leaping to conclusions about what needed to change.
Prime Minister Chris Hipkins. Photo: RNZ / Angus Dreaver
"The Labour Party made commitments around tax at the last election that have stayed in place for this term of government and we'll honour those. People will know well before the next election what our commitments are for the next term."
Asked about the purpose of the reports, he said they had been a long time coming, and part of the role of Inland Revenue (IRD) and Treasury was to produce reports and analysis on all aspects of government's finances.
"The New Zealand Treasury and the IRD produce analysis and research and reports all the time, that doesn't mean that governments immediately jump to and make policy decisions based on them, but it does add to the quality of decision-making that governments, whatever their colour, are able to make."
But ACT leader David Seymour labelled the reports as a "politically driven fishing expedition", claiming that Labour was hinting at bringing back its failed capital gains tax policy.
In a statement, Seymour compared taxing the wealthy to tall poppy syndrome.
"People should ask themselves, would they accept a government that used such intrusive powers to find out what beneficiaries spend their money on, or middle income households? Why, then, is it ok to go after people if they have money? How, then, does it fit with Kiwi values to only go after people if they're successful?"
ACT leader David Seymour accuses the government of trying to bring back capital gains tax policy. Photo: RNZ / Samuel Rillstone
The government should instead be trying to cut back on "wasteful spending", he said.
"The challenges New Zealand faces can be addressed. But in order to do that there needs to be a strong economy built around creating conditions for prosperity, giving people the opportunity to get ahead.
"The growth needed to lift incomes is strangled by too much regulation and red tape. ACT will get rid of it, whether it's RMA regulations making it too hard to use land and discouraging investment, productivity-sapping workplace relations laws making it impossible to employ staff, or banking laws like the CCCFA that make it too hard to get finance."
National Party finance spokesperson Nicola Willis put the onus of the findings on what she described as "Labour's economic mismanagement".
"The government's decision to embark on a money-printing, borrowing and spending frenzy has led to massive capital gains for some, at the expense of everyday workers," Willis said in a statement.
"That's not a result of tax policies, it's the result of Labour's deliberate monetary and fiscal policy decisions."
National Party finance spokesperson Nicola Willis says the party continues to oppose a capital gains tax. Photo: RNZ / Samuel Rillstone
Willis emphasised the party would still oppose a capital gains tax, reiterating the party's belief that Labour's economic policies were to blame for inequality.
"The solution to New Zealand's economic problems is not more tax. The solution is a government that will bring spending under control and demand more accountability from agencies including the Reserve Bank and that will allow lower and middle-income earners to keep more of what they earn. That's what National will deliver."
However, Green Party revenue spokesperson Chlöe Swarbrick said the reports released on Wednesday were proof that their belief taxing the wealthy would create a more fair economy.
Green Party revenue spokesperson Chlöe Swarbrick Photo: RNZ / Angus Dreaver
"Rules put in place by successive governments privilege wealth hoarding. Not only are these rules unfair, they're counterproductive and starve our health, education, transport and social services. They privatise profit and socialise cost," Swarbrick said in a statement.
"The only barrier to a fair tax system, well-funded public services and ensuring everyone has what they need to survive is political willpower," she 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."
It was fundamentally a political choice that "the wealthiest in this country are paying less than half the effective tax rate of the average family", Swarbrick told Checkpoint.
A comprehensive capital gains tax or wealth tax was the answer, Swarbrick said.
It was something the Greens would "unashamedly campaign for", she said.
"The mean estimated net worth of these [super wealthy] families in 2021 was $276 million but by comparison, Statistics New Zealand had previously indicated that they thought the starting point for the wealthiest 1 percent of households would be around $7.6m.
"And what that tells us is that the super rich in Aotearoa are much much richer than we thought them to be."
New Zealand Council of Trade Unions (CTU) economist Craig Renney also highlighted capital gains as an area which was creating inequity.
"Most New Zealanders pay tax on every dollar that they earn, whereas the wealthiest are paying no tax on large parts of their economic income," Renney said in a statement.
"Not only is that unfair, but it also means that the government is potentially missing out on billions of dollars in taxation. That places a greater burden on families who are just trying to get by."
Treasury's report analysis stated "New Zealand is more unequal than the UK and that it has become harder for the average earner to reach higher wealth deciles through ordinary earnings alone", Renney said.
"Basically, Kiwis can work harder, but it won't help them get ahead."
"This data demonstrates the urgent need for transformation of New Zealand's tax system and in the wider economy. Our tax system increasingly looks neither efficient nor effective."
Later this year, the government plans to introduce a Tax Principles Bill to ensure similar data like that in the tax reports released on Wednesday continues to be collected and reported on.
