Labour leader Chris Hipkins confirmed this week that he will contest the 2026 election with a policy to broaden the tax base, although the details haven’t yet been drawn up.
The former prime minister told a Stuff podcast that an additional tax, on something other than wages, would be part of his 2026 campaign to reclaim the Beehive.
For the past three decades it had been possible to provide world-class healthcare, education, and retirement while keeping government spending below 30% of GDP, he said.
But the ageing population means that will no longer be possible. Continuing to offer public healthcare and universal superannuation would push spending above that line.
Labour also wants to balance the budget and therefore would have to raise revenue from somewhere.
“We do need to have a significant conversation with the country about tax. But I don’t think we need to be jingoistic about it — even the current government is looking at new forms of revenue,” he said.
Tax capital
Hipkins doesn’t want to take that new revenue from workers, who already bear the bulk of the tax burden. International economists, such as those from the OECD and IMF, have told New Zealand it relies too much on taxing wages and salaries, and not other forms of income.
"Philosophically, I think regular bracket adjustment … is a sensible idea. As long as you’ve got alternative revenue sources to make sure the Government can fill the hole it creates,” he said.
The Coalition Government had also recognised the need to broaden the tax base, Hipkins said, and was doing so by increasing vehicle registration fees, putting road user charges on electric vehicles, and tripling the visitor levy.
He also argued it was looking to expand the taxation of capital gains with plans to impose ‘value capture’ taxes on properties which benefit from future infrastructure investments.
Rather than continue this piecemeal approach, Labour has been pondering some sort of economy-wide tax — such as a more comprehensive capital gains or wealth tax.
A somewhat vague post, shared by Labour Whangaparāoa’s Facebook page, showed former revenue minister David Parker has been pitching a “capital income tax” to party members.
It sounds a lot like the wealth tax he designed with Grant Roberston in 2023, which Hipkins vetoed, except perhaps more focused on taxing increases in wealth.
A sensible shepherd
Barbara Edmonds, the party’s finance spokesperson, told attendees at the FSC24 Conference that she was reviewing the whole fiscal strategy and looking at more than just “progressive tax reform”.
“You can’t just look at debt without looking at expenses and taxes. You need to look at it wholly, and if you change one area you need to look for unintended consequences in other areas.”
Edmonds doesn’t see herself as the key decision-maker on tax policy. She has previously said her role was to inform the internal debate and support the decision made by the party.
Some have speculated she and Hipkins may both favour a more traditional capital gains tax over the wealth tax, advocated by Parker and some of the more leftist Labour MPs.
However, Hipkins told Stuff his problem with the 2023 proposal was related to its timing and the ability of the party to adequately explain it to the public, rather than its actual design.
Official views
The Treasury produces a document assessing the Crown’s long-term fiscal position every four years. It is due an update next year, but in 2021 it said policy changes were needed.
“Our projections indicate that the gap between expenditure and revenue will grow significantly as a result of demographic change and historical trends, in the absence of any offsetting action by governments. This will cause net debt to increase rapidly as a share of GDP by 2060.”
Changing tax rates or limiting spending growth would help to close the growing gap between revenue and expenditure but neither would be enough on its own.
“This means that future governments will likely need to draw on multiple levers and consider trade-offs across different policy options in responding to our fiscal challenges,” it said.
“There are many ways in which governments could seek to raise additional revenue from existing and new tax bases beyond personal income tax. All have trade-offs; there is no perfect way to raise revenue, and different levers have different economic and social impacts.”
Treasury has long advocated for a more comprehensive capital gains tax. It said this could raise around 1.2% of GDP each year, although that was highly uncertain. A wealth tax would likely raise significantly more, but could come with unintended consequences.
As the agency said, there are no perfect taxes, but there is a growing consensus that New Zealand needs more of the imperfect ones, and Labour will be pitching one to voters.
208 Comments
Chris Hipkins talks to Jack Tame on QandA, and does a reasonable job of explaining how new tax sources must be found as New Zealand's population continues to age, which will mean more over-65s claiming the social welfare benefit called NZ Superannuation, and fewer young workers footing the bill.
He also (and this will delight Bernard Hickey) embraces the idea of busting the 30% debt level that National and Labour have jointly imposed on governments. If we need to borrow to invest in infrastructure, just do it.
https://www.1news.co.nz/2024/09/08/full-interview-chris-hipkins-on-labo…
https://youtu.be/5umufC4NKxY?si=A7IdHMVQ9tOrzBb5
I think the sensible way to fund future superannuation payments is to tax the unearned income from capital gains, inheritances, and gifts ... and deposit it in the NZ Superannuation Fund, which ought not to be taxed on its earnings. Capital gains taxes should be on realised gains on sale, less inflation. They need to include the family home. Other assets, such as bank deposits, should likewise not be taxed on their inflation component.
Hipkins doesn't want to increase income tax. But I think New Zealand's top tax rates need to be lifted to match Australia's. The state needs that extra annual revenue to lift our health care out of its disastrous decline. All health care should be free, accessible, timely, and comprehensive. Then no one will need to waste money on private health insurance. Think of the saving!
One quick way to ruin a countries economy, drive people to Australia faster, ruin a whole huge industry of home renovation/owner /flipper, and drag people's present & future wealth further into the gutter while making house values climb is to introduce another tax on money made selling your family home / homes.
A better way is to heavily charge a annual fee for houses not permanently lived in more than 6 months of the year.
Even better is to stop taking every avenue away from Joe Average to make money and incentivise the way to make money in avenues where they can tax easily... Like a great TD Rate that is government guaranteed up to 20M. While at the same time capping mortgage interest rates at a fair rate.( Stop the bank$ gauging)
Kiwis will always find a way around things.
I would invest my money in a Great TD rather than property 100%!!! and that would drive house prices down while not making me any poorer.
The recent 6% rate has seen that happen!
But even better is to just stop the billions wasted on dumb things like
1. Huge parliament and it hangers ons
2. Separate depts that are already covered by " Kiwi Depts"
3. Corporate tax dodgers like Google.
4. waste
5. Minorities woke demands
6. Overseas donations to Pacific islands on the Chinese tit.
7. Dot dot dot ..
Better still the government needs to stop taxing the interest on your Term Deposit and go back to where it was in the 1980's, no tax on TD's. Basically tax is stuffing up people trying to get ahead, imagine no tax while you build that house deposit. All that's happened over the years is that people have been pushed into tax evasion and disincentivised to do anything and they constantly try and avoid getting screwed.
No I remember it well. When I started working at 11 or 12 I paid no tax on my interest. Basically it became theft by stealth after that. Then there was a time when filled out your annual tax return paperwork for a few years you were able to claim it back and then one day the option to claim it back just disappeared.
Some learning for you Grifter ....
In 1978 a Child Tax Rebate was introduced to avoid the need for children to pay tax on small amounts of income (excluding interest and dividends). The rebate was set at $78 per annum, which allowed children to earn up to $538 per annum ($10.35 per week) tax free. The rebate applied to children under the age of 15, or under the age of 18 and attending secondary school. The Child Tax Rebate was increased to $156 from 1 October 1982, the equivalent of a 20% rebate on $780 of income. It was later renamed a tax credit for children and subsequently replaced in 2012 with a “$2,340 active income exemption” for taxpayers under 18 years of age.
LittleAkaloa, I almost stopped reading at this bit:
"... ruin a whole huge industry of home renovation/owner /flipper, ... "
Renovators and flippers should already be paying tax on their activities, including the capital gain. Thus they'd be unaffected.
Home owners are free to renovate to their hearts content if - as is most likely - the family home is excluded (which I think is a market distorting paradigm that unfairly benefits the wealthy and should be dumped).
Please bone up on tax law if you want to be taken seriously.
Even that staunch life long supporter of Labour , Chris Trotter , left them ... distraught that they weren't Labour of old , the champions of the workers ... they'd become the heroes of a wealthy chardonnay socialist inner city set ... wokeism oozing out of every pore ... political correctness ramped up to the nenth degree ...
... they will not win government again until the incompetent failures of the past are removed ... Chris Napkins / Megan " no gas ! " Woods / David " tax the f out of them " Parker ... all must go ...
Nothing he ever says happens. Best ignored. Fix health, fix education, fix crime….failure after failure. Now, fix the tax system by punishing the organised and the ambitious. He won’t have a job by the end of the year. He is a loser, dropping in the polls each month. This latest brain fart will ensure his quick demise.
Well, he would say that wouldn't he. Labour are addicted to taxing other peoples money because they have no clue how to create wealth themselves any other way.
"Philosophically, I think regular bracket adjustment … is a sensible idea. As long as you’ve got alternative revenue sources to make sure the Government can fill the hole it creates,” he said.
An alternative view would say that the Govt (both Labour and National led) has been maintaining the bracket creep theft by stealth for over a decade while the last Labour increased fiscal debt by 80% with nothing significant to show for its profligacy.
Here's a little something that won't have occurred to Chris Napkins & his Lack of Brains Trust ... we are pouring ample quantities of money into healthcare . . It's just , our healthcare system is poorly designed and discourages competition & innovation ... Luxon doesn't get it , either , to be fair ...
You also can't compare us to Micro-states like Singapore, or countries with 23 million plus people on a smaller landmass like Taiwan. They’re also fundamentally different from us in terms of cultural similarities with the US or Australia which culturally are much more similar.
New Zealand has around 20 people per square kilometre, Singapore has around 8322 people per square kilometre. This dramatically changes how they can deliver services and makes for a much more efficient system compared to our healthcare which by necessity has to be much more localised and cater to a more disperse population.
All health care ought to be free, accessible, timely, and comprehensive. It is affordable if we want it to be affordable. What is lacking is a sense of social responsibility. The comfortable middle class have become addicted to paying for private medical insurance for themselves and their families, and bugger the poor. The problem with that attitude is that the poor don't disappear: they simply become the ill, disabled, non-working poor, and a much greater drain on society than if they had free and easy access to a properly functioning health service.
Actually private health care is of no use if you have an accident - you have to go public as ACC covers it not your expensive private cover. Sometimes after much delay and upset ACC will pay private hospitals to do the op the public hos is too overloaded to provide but it is still "public ACC" not your private cover. Interesting to know whether how the cost of our private cover compares with countries with no ACC - are we getting a discount for the fact that our glossy private cover is in fact limited?
I think he is hilarious. He has no idea. Their strategy seems to make the biggest mess they possibly can, ie ruin the economy, place us in massive debt, have people addicted to handouts, and then they have the answer to fix it all…..tax everyone with an asset. So the clear strategy is to make a mess, blame someone else, and make up a solution that punishes everyone…..useless.
I would love to agree with you, but unfortunately 6 years of Jacinda Ardern and her identity politics has given a large group of society the belief that they are owed other people's money. The opportunity to seize it from them would be taken avariciously and with great glee.
What he really needed to announce was a tax cut on personal taxes, i.e. first $10k tax free 25% up to $75k 35% thereafter.
Then announce whatever wealth tax.
Instead his broaden the tax base message is lost under the whining and moaning as will be evidenced in this comments section.
So no progress will be made BAU.
WFF needs an overhaul. As Terry Baucher noted in an article a while back, the taxation is incorrect as it significantly penalises those on WFF when it comes to abatement, so much so that it is hardly worth having a sole earner getting a pay rise as they wind up with less in the hand at the end of the week between WFF and income vs if they didn't get said pay rise. This is important to resolve as it will entice more to progress their careers and get back into the work force given the financial benefits are worthwhile, vs the current system which disincentivises this
What should be happening is all parents should receive way more benefits from the state. Like 12 months maternity leave, paternity leave etc etc. along with further payments to support parents until the child turns 18.
Kids are the countries future - yet we actively incentivise (in the form of cash) the poorly educated demographics of society, who have likely had a very poor childhood experience. And we do nothing at all, in fact we penalise, the middle and upper class of society for having children.
The fact that we spend $20 billion per year on millionaire* retirees super is atrocious. Super needs to be asset tested. I can't believe that as a country we are OK with spending this sort of money on the folks that have received the largest untaxed wealth gains in history.
The sooner we start spending at least $5 billion a year on families (the future) -across the board- the better society will be. But this will be a very long term process that will take years to bear fruit.
I agree with some of your points, but why pay out more by the taxpayer when taxing capital gain or land tax would reduce the cost of housing, and provide the youth with less fixed costs, thus removing a barrier to having children? Affordable rent by means of % of total take home pay, and affordable housing (ability to service mortgage) is more important in my view at least. WFF isn't perfect, as it is intended to allow a minimum standard of living for families on lower incomes, and if they fixed the abatement issue then it would free up the sole earner (assuming this is the parenting case) to progress their career and earn more without penalty, allowing them to reach greater heights sooner rather than being penalised for doing so unless they get a significant increase in income enough to offset WFF entirely. This situation adds more stress and time away from family than ideal.
Yeah, nah. I can do whatever calculations I like. I can add my gains from shares or whatever long term investments I have and add that to my salary and average down the preferable I pay based on the total that’s up to me, and it makes me feel less ripped off that I pay the amount I do. You (and Dripkins) don’t have the right to start reclassifying things as taxable income when they are not, and then drain that money away. That is the point here….and if that came to pass, it would be avoided easily…that’s the other point.
Well average Joe, being average means you have like $1000 in the bank so clearly if you have more than that you should be taxed more. I know, things are really going down the toilet out there, I mean why even bother to getting out of bed ? Just get on some government handout and whinge on here all day.
Yeah it’s so ironic. People that cannot manage money trying to lecture others on….how to manage money. They really need to get that genius out there and teach us all. It’s almost as hairbrained as giving money to crims who can then teach other crims how not to be crims. Wait….Labour did that too. That turned out well.
You're taking a government handout by way of the Council rates rebate which apparently you qualify for with ease. Yet supposedly you were so successful you retired in your late 40s, you're obviously not willing to contribute your fair share.
by Zwifter | 23rd Aug 24, 10:50am
You don't need anywhere near that mate, pretty much nobody ends up with an individual net wealth of $5M in this country. You would be shocked on what I live on and I'm not even retirement age, its so low I get the full Council rates rebate with ease. You need a mortgage free house and a decent car with no outstanding debt when you retire. If you had $1M in the bank you would be living the dream and then with super on top, I would then be pulling in more each year than I ever did working and it would be that cruise every year in the Pacific.
It's possible because you're living off other people eg. you don't pay your full share of your rates. You've also commented about not having insurance but you will ofcourse expect to get help from emergency services along with free healthcare but again, you're living off other people who are paying insurance and paying tax towards healthcare.
3rd party insurance on cars, would get pretty expensive full cover on both. Can only drive one at a time so some sort of policy that will only insure me would probably be the go, never looked into it properly. Not sure how that is "Living off other people", if you insure yourself up the wazoo you will never get ahead.
In an abstract sense, anyone who retires early when they are still physically able is living off other people.
Realistically if everyone lived the way you do the wheels would come off the proverbial bus pretty quickly. I'm sure that you worked hard to get to where you are now, but "worked" is worth a hell of a lot less than "working" when it comes to society and the economy not falling apart.
There is that appalling situation where 50% of everything contribute nothing, but then there are those of us on the top tax rate, paying gst on everything, paying rates and petrol taxes, acc and god knows what else and yet there are parasites out there that say it’s not enough and we find a way to tax these productive people more. All that will happen in a hypothetical world where this sort of idiotic plan became a reality would mean society would lose the useful and productive (they would leave) and society inNZ would collapse under the weight of the useless.
Most of those people are working hard and and managing their budgets to the best of their abilities. Yes, there will always be those that don’t want to work, but most are living in poverty or close to it. You or I would not want their lives.
Those fortunate enough to own property and other assets can afford to pay capital gains tax. And yes I would be affected by it.
I think to make it more palatable it should not be at marginal tax rate, but maybe something like 15%. Then it could be increased later if National doesn’t scrap it first
They don't contribute nothing; in fact, almost everyone contributes something. Many of those you call parasites are likely just as important to the running of the country as anyone else. Sure there will be some people taking the piss but it isn't even remotely close to 50%. If you take the time to read the document you're indirectly referring to, it provides much more detail and context.
One often overlooked part is that the figure includes "in-kind benefits" like healthcare, education, and housing assistance when calculating who is paying net tax. Naturally, some people will need more than others. For example, someone with children will receive more in education funding than someone without. Retired people who are no longer able to work are going to require more assitance than a 40 year old in their prime working years. None of that is a given but it's how our society has been structured for the past 100 years, and most would prefer to not return to some kind of neo-feudalist system.
And who are you calling parasites? Is it those who receive superannuation, who get more in benefits than they pay in taxes and use more healthcare? Or is it those with children who receive more in education funding? We'd likely lose more productive people if we made it so everyone had to be a net taxpayer, as it would make for a terrible place to live.
Again, this is an incredibly misleading stat. Who do you think it is that is collecting these transfers? You seem to think that we have this massive cohort of bludgers sitting around mooching off the government when they could be working who are dragging us all down. But that's just not reality since the majority of those getting "transfers" are those on superannuation. There are 842,000+ over 65's, it's literally 50% of the welfare budget. The accomodation supplement is another one that is hardly a benefit as it ends up being a handout to landlords rather than actually benefitting any tenants, and in fact likely just increases rental costs for all renters.
Here is a link to the actual document.
Here is a link to the new one that was released very recently.
"You seem to think that we have this massive cohort of bludgers sitting around mooching off the government when they could be working who are dragging us all down. "
I'd challenge you to find any comment from me that states that.
However there's plenty of comments about eg "... this massive cohort of bludgers sitting around not mooching off the government when they could be paying additional CGT & Wealth taxes who are dragging us all down."
Maybe I've misinterpreted your comment, but that's the general subtext I'm getting. If I'm wrong, please correct me and clarify who you are referring to when you mention that 60% of households aren't paying net tax. What's the reason for bringing up that particular statistic? Do you just think it's an interesting fact, or is there a deeper point you're trying to make?
Like genuinely, who exactly are you referring to when you claim that 60% of New Zealand households aren't net taxpayers? Why do you bring up that particular statistic so often without any additional context? Having such a small cohort of households being net taxpayers is an issue, but it could also be a strong argument for diversifying the tax base rather than being so reliant on income taxes.
About time some one said " The accomodation supplement is another one that is hardly a benefit as it ends up being a handout to landlords rather than actually benefitting any tenants, and in fact likely just increases rental costs for all renters." - amazing how the "expert" property commentators and economists never examine why rents are so high in the context of government funding of rentals - take a look at rent returns and areas such as Fordlands and Porirua deliver consistently the highest returns to landlords - and it ain't coming out of the pockets of the tenants.
We want to pay less tax yet have more infrastructure, better medical care and a better pension.
Why not have a tax system based on how long you have been paying into the NZ tax system. The more generations the less tax. Tax immigrants for all the infrastructure they seem to think they should have access to free of charge.
'Why not have a tax system based on how long you have been paying into the NZ tax system. The more generations the less tax. Tax immigrants for all the infrastructure they seem to think they should have access to free of charge.'
That's a disgraceful and appalling suggestion: 'Tax them, not me!'
- "New Zealand Tax revenue: % of GDP was reported at 30.8 % in Dec 2023."
https://www.ceicdata.com/en/indicator/new-zealand/tax-revenue--of-gdp#:….
Our tax rate is low compared to other OECD countries (those that consider themselves first world and provide the services deemed required).
The fact is if tax (as a % of GDP) is needed to increase to provide those requirements then it will fall upon those with the ability to pay....you cant get blood out of a stone.
You failed to mention that on average the rates burden in OECD countries is about 1.0 percent of GDP. In New Zealand, it's nearly double - 1.9 percent of everything the country produces.
https://www.nzherald.co.nz/nz/politics/ird-looks-at-how-much-tax-we-pay…
(Paywalled)
What we actually receive for our rates is a comment for another time.
can now see a least a two term national government, time will come for this but not until all us boomers have gone on our way.
the choice will be national led coalition and more user pays for everything so you pay more as you use things, roads, healthcare, education
or a labour led coalition where your capital as well as your earnings are taxed and the money is used collectively to pay for the same thing
the big problem is both sides waste our money and we just go from ying to yang pandering to their supporter base rather than what is good for NZ long term
I assume you haven’t been paying attention. Here let me catch you up:
National are spending more than labour did their entire term aside from the one budget where the entire world shut down.
National will continue to spend more next budget despite saying it’s time for austerity.
National are spending on projects that will give us a return, not dumbass, spendthrift nonsense like Pike River, Light Rail, the moronic gun buyback, billions on maoris, the Harbour Bridge non-cycleway, 3 Waters....OMG!!!...and there's actually more than that.
Unbelievable.
Yes spending on infrastructure and essential services is something we all need the government to do, we simply cannot rely on the private sector for this as it's proven all the private sector is interested in is unearned income and tax free gains.
But you've unknowingly highlighted a very important point - none of that is possible without appropriate tax, and until National are willing to behave like the adults they claim to be and implement an effective tax regime which disincentivises unproductive and unearned income and gains, they look even sillier than the last. What they are opening the door for is an absolute need for capital gains tax, which Hipkins is gladly obliging to, in order to win votes off the idiocracy who truly believe tax is the devil.
The irony of your comments is that you believe this government spending is good so long as somebody else foots the bill, while you gleefully promote your landbanking endeavours for which you have provided nothing useful to the economy other than holding the bag for a temporary amount of time.
Wingman, National have spent more on businesses cases for RONS that will not get built in their first year than Labour spent on the cycleway bridge. And the cycleway bridge was a stitch up. If they had combined it with a public transport bridge it would have been a bargain but it would have also proven that another road crossing was not required so they decided to put the PT connection in a tunnel so that the business case for the road tunnel stacked up.
You seem to go on about doing research well I suggest you maybe do some research on transport before you spout your ideological Labour bad National good nonsense.
There are no non property examples. The best business plan and financials will get you nothing from a bank. I had a friend who invested in my business because I couldn't get a dime from a bank, I couldn't even get a credit card under the business name. That was 12 years ago, I bought him out last year for 9x what he put in.
The only way to fund a business is through private equity, which can be hard to find when most people keep pouring money into housing.
A wealth tax would be great! California and New York have them, and as a result many of those who paid huge income taxes have left for other jurisdictions, leading in a shortfall in revenue for those states to support welfare programmes. And people are still leaving.
The boomers ( a generation I belong to) will all vote to keep Labour out of power. They had the best years and the most luck but will do everything to not help those who came after them. They love to talk about hard they worked. In reality they worked no harder than any generation which came along after them. Working for the government, a local council or a port for example was a cushy number and virtually guaranteed a comfortable retirement. Not a lot of sweat involved in one’s work.
But 99% of boomers didn't work for the govt., a local council or port....did they?
They worked for themselves, they worked for local employers, they worked overseas, they started businesses, and paid up to 66c in the dollar tax.
No one got rich working for the govt., unless they're at the very top.
I have often said to others that some of the happiest people I dealt with when I was working were the retired couples who were both receiving National Super and one of them had a government pension. They were very comfortable in their retirement. Not rich which is a word you are totally fixated on. Being rich does not always make you happy. They had options many retirees today do not have.
Being a boomer I agree. We had it very easy. Free education, work for anyone who wanted it , cheap housing and rent, cheap food and the ability to travel the world before the masses were unleashed. On the downside we didn't have the consumer goods and the cars were crap but things were a lot less competitive.
Just do one labour nobody believes a word you say anymore. Jacinda spunked money on tax working groups then ignored their advice with a majority never seen under mmp. Then chippy rules out a wealth tax. Now he essentially wants one again. You couldn't make this shit up.
I wonder how wealth to be taxed would be calculated, as it runs the risk of opening up all sorts of issues, like:
the potential to drive some of the most enterprising overseas if the value of private entities created from start ups is regarded as the founder's personal wealth.
And what about the charitable trust status of asset rich organisations like the Churches and Iwi? How will that kind of collective wealth be taxed?
As a tail end boomer who has worked for myself all my life and done well (God if I knew what I would have to go through at the start may have not done it!!) I don't mind paying my tax, and still pay and pay.
There are multiple issues as I see it.
1. Only a smaller group make really good incomes. Nothing devious or anything there is limited ways to make a lot of money in NZ.
2. As a result we don't have many actually paying a lot of tax - I'm not blaming those that don't it's hard to have the means here to earn larger amounts.
3. We have tried for decades to increase incomes but it's hard as many of our industries are primary based and unless you are the owner or smart enough to provide key services the rest is lower paid.
We will have to have some sort of capital tax soon. This will be painful for many but it will pass. Getting the balance right is going to be the trick so people don't up and leave.
The key is if you want me to pay even more tax, I need to know how this is going to be used to benefit NZ Inc and no more silly stuff. Tell me it's fenced into health, education and infrastructure with a vision of true health care for all, great education (truely free) and a infrastructure plan that has a rolling 10 to 15 year vision, work etc that no stupid politician or local "I want a nice road to my bach" group hijacks.
We will see I suppose.
Agree we do need capital gains tax as the real money made in this country was through tax free capital gain.
Friends of my parents owned a very poor farm in Wiri South Auckland which was rezoned industrial and sold for a big capital gain. They bought a large farm in Flat Bush which was again rezoned residential. The children now have a massive subdivision. No tax paid.
If anything gets me very grumpy it's being told it's luck. BS .. you make your luck. If it's luck go and buy lotto tickets. I have many friends who started with nothing, no family money, land etc. who are very successful, and pay a lot of tax.
Sorry to tell you it's 1% inspiration 99% perspiration and you will fail many times as well along the way - it's how you drag yourself back up and get going that counts. Also don't blame anyone or anything. Lifes not fair - never has been never will be.
We need to broaden the tax base, especially with the retired population constantly growing, collecting superannuation, and consuming more health resources, which have become significantly more expensive and labour intensive in recent years.
And this isn't an argument for more tax, or how that tax is spent, but we need to be shifting taxation away from incomes and finding revenue from other sources. Given our demographic challenges, we are likely going to end up having to spend more just to maintain our current standards.
We also need to recognize that "working" holds much more value than "worked." Yet, our taxation system gives capital, a stand-in for past effort, a free pass, while those who are actively working face much greater challenges. The incentives are backwards, and this is contributing to worsening outcomes.
At present, our primary form of taxation is on incomes, while capital remains largely untouched. This isn't just a matter of fairness; the working population simply won't be able to sustain the increasing burden of superannuation and health costs. Those benefiting from these services are contributing little to nothing towards them, yet they are far and away the wealthiest cohort.
Yes, they worked hard and paid taxes throughout their lives, but taxes aren't a savings account; that capital funded services they used during their working years. Plus they have benefited immensely by under-investing in vital infrastructure which is now another additional cost that has been pushed onto younger and upcoming generations.
Good comment.
I'm fortunate enough to be a properly high income earner (for now - depends how my business keeps performing lol) and admittedly I wince a bit every time I get the "provisional tax payment due" email from the accountant. I'm relatively young so haven't had much time to acquire assets, but presumably I'll be in a good position to do so if I keep earning as I am.
But I also appreciate taxation is required to fund public services and provide some balance to society. I wouldn't be who I am now without having benefitted from a good public education, healthcare etc. I'm kept safe (perhaps to a lesser extent these days) by police funded from the tax I pay, and so on. So I wince with my avaricious hat on, but with my societally-minded hat on I know it has to happen.
Funnily enough I was raised in a house where my father had - and retains to this day - a simple attitude that all taxation is theft. I just smile and nod when he gets ranting at the dinner table.
Despite all this, I accept and even believe that we need to tax capital. HOWEVER, for me there are two key considerations:
Firstly, we really need to lower tax on more modest incomes. Have a decent tax free threshold, and a lower tax rate from there. Use capital taxation as a means of rebalancing the tax system so that lower income earners (as you say we have limited opportunities for good incomes in NZ) have a fairer shake.
Secondly, I agree 100% that you'd need to clearly and quickly demonstrate to those whose capital is being taxed that there is a pathway to them and all of society benefitting from this taxation. Starting with clear plans for fixing healthcare, education, infrastructure etc then actual tangible progress. Not just endless lies of "vote for us next term and you'll finally see the extra tax put to good use" and pointless working groups, or pet projects of special interest groups.
I wondered if they have modelled how many taxpayers and companies would remain in NZ once the tax advantage of no CGT that NZ currently confers is removed? I would be gone - off to Australia to utilise the self managed super fund scheme to reduce my income tax to 15% and CGT to 10%, and for everything to be tax free once I hit 60 years of age. What does NZ offer?
Well at least we'll have the new holiday proposed by the coalition. My sources close to cabinet say the new proposal, to be called capital day, will allow employers to deduct employees for any amount they deem reasonable once per year. I've already earmarked my take for some new golf sticks, although I will be investing some back into the service industry through a couple of young ladies I met online.
"Philosophically, I think regular bracket adjustment … is a sensible idea. As long as you’ve got alternative revenue sources to make sure the Government can fill the hole it creates,” he said. "
Smoke and mirrors, a hole is only created if government spending increases faster than inflation...
If you're going to tax capital that means inheritances and that means the family house sale that your voter base has been hanging out for heading into reitement. Good luck!
Cullen tried CGT 6 or so years ago at the top tax bracket and Jacinda had to issue a "not on my watch" call. It was one of the first of a million or so working groups.
Very few countries have a wealth tax, if NZ unilaterally introduces a wealth tax the key issue is how much money will leave NZ and how much will not come into NZ.
Heres the treasury report on wealth tax from last year, Page 21 - para 62-67 provides some comments on this - the thing is, it is very hard to know how much money would leave or how much would not come into the country.
At a time when NZ needs as much investment as possible it does seem counter productive.
Also, tax as a portion of GDP is 34% in NZ, which is in the middle of the OECD group of country (two countries to the right of the average) - so NZ is not completely out of step with other countries.
Also, NZ super costs approx $20 Billion per year
Core Crown spending on superannuation and welfare benefits in New Zealand - Figure.NZ
If the cost of supporting the elderly is the key issue, the obvious thing to be consider would seem to be to means test super. If NZ super was means tested is the same way as Australia, it would save approx $5 - $10 Billion - which would cover the bulk of the revenue gap.
I think it's clear that we need some kind of capital tax to diversify government revenue away from incomes, but of all the proposed options I think a wealth tax is the worst option. It's frustrating that this is the option being rolled out by Labour/Greens/etc when there are much better options like a land value tax or even a capital gains tax which are far more common around the world and much easier to implement.
If the cost of supporting the elderly is the key issue, the obvious thing to be consider would seem to be to means test super. If NZ super was means tested is the same way as Australia, it would save approx $5 - $10 Billion - which would cover the bulk of the revenue gap.
Our superannuation scheme really feels like a slow-motion car crash, it's clear the setup isn't sustainable at all and is becoming an increasingly costly service every year but neither the electorate nor our politicians seem compelled at all to do anything proactive about it. It seems like it will just break when it breaks which is going to be worse than if we made some pragmatic decisions that could spare us the worst of it.
Last I checked, the NZ models assumed around 40% of superannuitants would be excluded from receiving a pension which is what it is in Australia. However, NZers are much poorer than Australians, and they dont have large super funds that they have been contributing 9-12% of their income to for 30 years to self fund themselves. The tiny number of wealthy New Zealander pensioners would certainly not add up to $5-$10 billion in savings.
That is not actually correct. In Australia, you can either earn salary + super or you can earn a super inclusive salary package. In the case of the former, if the super contribution is increased from 9% to 12% then your employer pays the extra contribution. With the latter, you would receive less salary, and more super, so you pay the difference out of your wages/salary.
You also ignore the fact that many people use the salary package option to elect to salary sacrifice additional super contributions over and above the Govt minimum - this is a common financial plan for people approaching retirement as they bulk up their super fund in order to ensure as much as possible is in there for when it becomes tax free at 60. Another thing you can do is once you are over 50 you can sell your family house and transfer all the sale proceeds to the super fund, and it doesnt count towards your yearly contribution cap.
Totally agree that being able to remove funds from Kiwisaver completely defeats the point of it. A 20 year old that contributes to Kiwisaver for 10 years and then stops completely for the rest of their life will still have more money in it after 40 years than the 30 year old who drains their fund and then continues contributing for the next 40 years. Such is the power of the time spent compounding.
KW...thanks 🙏. I'm considering topping up my super with voluntary contributions. I have access to an accounts intermediate called Remserv, they deduct pre-PAYE, then it's taxed at 15% in my super account contributions up to a maximum.
One point I will make is stealth fees are so much higher here than Simplicity NZ. With great sums of money comes great skull-duggery 😂
Capital gains tax is significantly different from wealth taxes, but they get lumped together. Nz should have had a CGT years ago. So many people have benefited from tax free capital gains creating a wide wealth divide.
IMO labour is lazy bringing up such taxes again, when they could be looking at other taxes like taxing people that land bank. We need to move people away from property as their form of investment into something productive that earns the country money.
Tax is like the cost of services provided by a firm purchased by consumers. Taxpayers are consumers and the firm is the administrative government. Superficially the government can compulsorily tariff its customers because it is sovereign, but unless that extends to physically preventing taxpayers from relocating to other countries (like North Korea does) then it remains dependent on its consumers to choose to keep living here and paying. As taxes (prices) rise then taxpayers (customers) can and will choose other options. This effect has always happened and always will happen.
Comments above about eg California show this; the only difference there is the ease of movement within the United States rather than internationally from New Zealand. But the effect remains the same and it is just a question of balancing the inconveniences. We are already seeing young New Zealanders, who experience less inconvenience by moving than those with families, doing just that.
Unless government spending is brought under control I see no reason for this effect to reverse - unless of course the option to move becomes less attractive because, eg, the alternative (hitherto predominantly Australia) become less attractive. But there are now many alternatives; the Middle East, and low tax American states are all viable destinations for skilled workers including those with dependent families.
What I find curious is that New Zealand taxpayers continually vote for one of two similar high tax and big-government parties (national/labor) while the low tax political parties remain in the minority (eg Act). We'd rather move country than vote differently.
Many countries offer what is known as the "Golden Visa" whereby they allow wealthy people to obtain residency and citizenship. I hear the Italian one is pretty popular right now (as people exit the UK due to the upcoming CGT tax hike and the non-dom change).
https://getgoldenvisa.com/italy-golden-visa
The wealthier you are, the easier it is to move countries, and the more options of countries you have to move to. Labour is so naive to think that wealthy people are going to be somehow trapped in NZ forever, handing over their wealth to the Govt every year. People say you can't take land with you, but you can sell the land and take the money with you.
Can I ask a serious question: how does someone with the outstandingly impressive record of failure across multiple agencies (from economic to health to race relations and even biology 101), who has been shown to lie (vis a vie "everyone had a choice to Vax" and some naughty hookers are to blame for another lockdown in Nthland), how does he get a junket to WHO? Are we - the taxpayer (aka cows udders for milking), do we pay for this?
If C Napkins is honestly invited to this table, what does that say about the quality of "leadership" being called upon?
In what clown world do the multiple architects of such legacy gets global stage to shine?
I'm going to watch Shaun the Sheep with my 6 year daughter. Now Shaun, that's a farmer I can trust. He should be on the WEF panel. Not Napkins.
Another article here indicated that more tax money is needed for retirees in future.
But then you hear labour (& greens) plan on taxing mums & dads for their rental higher than other wages, that is bizarre.
Those mums & dads work their weekends on house repairs when others have pleasure time. They do this to finally have pleasure time when they retire but obviously labour (& greens) want to take the hard earned retirement funds from them.
So, how about incentising hard work $ saving for retirement rather than punishing it?
Then I'm sure more Kiwis would be able to stand on their own feet.and would not need tax funding for their retirement!
You miss the point of these policies. Its not about funding more Govt services, its about identity politics. The creation of several "victim" groups, who have now been indoctrinated to believe that other people owe them stuff, so they vote for the party that promises to take stuff from one group and hand it to the other. The more victims you can create, by perpetuating things like race and wealth based division, the more voters you will have. Everyone will believe that they are the "victims" and that the "others" deserve to be punished for their "oppression" (from their race/wealth/income/assets/house ownership "privilege").
So no, incentivising hard work and saving for retirement would create more National/ACT voters - and that is not good for Labour/Greens.
That's bollocks mate. Capital gain on an house is not earned at all, let alone hard earned.
What you are doing with your pleasure time on the weekend is maintaining an asset so it produces an income via rent. You aren't increasing the capital value by fixing a hole in a gib wall.
These comments are hilarious and really show the dark side of New Zealand's way of thinking. Everybody is so fixated on investing in non-productive assests for tax free capital gains.
I see nothing wrong with a capital gains tax. If you are paying capital gains tax you have made money on your asset.... What is wrong with that?
Let's not forget the fact that a proper CGT is only payable when the gains on that asset are realised.
Look around at the state of New Zealand... Do you think if we continue on this path that the future is bright? I for one don't.
It's sad, it really is. I get the angst that it's just more tax, but really?
Boomers have made insane wealth on property which doesn't come without the work of others at some point to realize that wealth. We have record amounts of young people leaving, social anxiety and mental illness rising and this entire comment section is about "better not tax me, I worked hard for my property wealth".
I honestly wish luck to those wanting the gravy train to continue because NZ society is going to erode further and the tax burden to keep it under control will continue to rise if we don't fix some of the basic issues.
The most dangerous man is a man that has nothing to lose.
For those reading this that don't agree, why do you think almost all retail stores have a "be kind to our staff" sign up? Have people just become horrible and somehow collectively agreed to be horrible? You take away security and people become on edge, stressed and on the brink of flipping out.
Until we work on making the future more prosperous and affordable in NZ, the tax burden will only continue to rise.
Think of it. Young educated kiwis leaving, bigger population falling into pension eligibility, heavier reliance on welfare as cost of living (property) rises away from more of the population, rise in mental health and crime.
Keeping the property ponzi going and increasing is destroying this country inside out and will continue to cause taxes to increase to keep the entire system civilized.
More taxes are big losers in NZ elections.
Arnold Nordmeyer's 'black budget' in 1958 introduced big tax increases and lost Labour the election....big time.
Kiwis are much more mobile these days, more taxes mean more of us moving offshore, just like when Muldoon skewered kiwis with death taxes and extortionate income taxes.
How do you change the attitude towards paying tax first?
There's an entire industry built around tax minimisation. Simplify the tax law. It needs to be rewritten from scratch. If tax is the biggest incentive or manipulation tactic, there's already something flawed in the market, capitalism and the people.
The middle class brainwashed into bemoaning the working class and beneficiaries for stealing their wealth, and can't see they're being constantly ripped off and manipulated by the very class they're trying to be part of.
Most of the taxes in NZ are paid by few people.
50% of households in NZ don't pay any net tax, (excluding GST).
Any attempt to lighten the pockets of the other 50% would have fairly serious consequences for NZ, people are pretty mobile these days. This is not the 1970's.
Any attempt to lighten the pockets of the other 50% would have fairly serious consequences for NZ, people are pretty mobile these days.
The alternative is just let the money dry up and have no pension eventually when the fund runs dry and the country cannot afford it anymore. At the current trajectory it won't take too long to get there, as well as increased deaths due to delayed treatment and poor healthcare due to again, lack of adequate funding. These things might not have mattered so much to you in the 1970's, but pension and healthcare will matter to everyone soon enough when they need it.
The issue with tax on capital is surely whether that drives much needed capital out of NZ. We need some sort of competitive advantage to encourage capital growth in NZ which creates jobs.
What Id like to see is:
- no tax in salaries to say $10k, and the tax bans that are reasonable thereafter. This helps the lower income earner more than anyone else.
- GST to 20% which hits the bigger spender more than anyone else
- tax on “luxuries” at 30% minimum which would include cars, appliances, electrics etc, again hitting those that spend more and change more regularly
- toll roads on all main arterial routes with a commensurate decrease in public transport ticket costs. This gets people on to public transport and provides revenue for improved services
- compulsory Kiwisaver at a minimum of 10% from employee and employer. Remove the $1,000 per year start up grant but also remove or decrease the tax. This means more saved for the future and less load on govt pensions, not to mention more funds for investment in NZ by the fund managers.
It can not be just about grabbing more tax. It needs to have functional benefits for society so that there is fairness and a benefit to all tax payers.
Where are the downsides in this?
GST to 20% which hits the bigger spender more than anyone else
This impacts low-income people far more as it ends up being a much larger proportion of their income compared to higher earners who have a much greater capacity to save.
20% GST shouldn't be acceptable when it's applied to essentials like groceries, yet excluding those essentials makes the administration of GST way more complicated so better to just leave that alone.
From the EU experience, wealth taxes do drive capital in to other jurisdictions and are being rolled back to things that look a lot like...Capital Gains Taxes on property.
You've got the wrong government, this one has no intention of gouging the so-called 'rich'.
Whoever they are.
Thousands of kiwis moved to QLD in the 1980's to avoid death taxes. There is absolutely zero point in taking risks, building businesses or employing others to make money if the government is going to confiscate it.
The rich are fleeing Britain again, just like the Beatles, the Rolling Stones and Rod Stewart did.
https://www.dailymail.co.uk/news/article-13826451/Britains-richest-plum…
Thousands may have left, but so many remained and still do to this day. what is currently driving people away is lack of opportunity and cost of living. Address these, which will take additional income streams for govt, and we may yet give the young hope and convince them to stay. As you say, people are very mobile and the youth are talking with their feet at present.
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