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Chris Hipkins says new taxes will be needed to fund healthcare and pensions for an ageing population without running up debt in the future

Economy / news
Chris Hipkins says new taxes will be needed to fund healthcare and pensions for an ageing population without running up debt in the future
Chris Hipkins speaks as part of a panel at a World Economic Forum event in Tianjin
Chris Hipkins speaks as part of a panel at a World Economic Forum event in Tianjin

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.

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46 Comments

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.

All health care should be free, accessible, timely, and comprehensive. That can be funded by a 10% tax surcharge on all incomes above, say, double the median full time income, about $135,000 a year. Then all the angry moaners in the comments here wouldn't need to waste their money on private health insurance. Think of the saving!

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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 Maori depts that are already covered by " Kiwi Depts"

3. Corporate tax dodgers like Google.

4. Treaty waste

5. Minorities woke demands 

6. Overseas donations to Pacific islands on the Chinese tit.

7. Dot dot dot ..

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Unfortunately I have only 1 uptick to offer 

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And just as unfortunately there is no downtick option.

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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.

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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.

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Whatever

They were gutless last term

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Living in the past again, HouseMouse?

Certainly not the most constructive approach to a very significant and consequential subject that would bring NZ's disgustingly out-of-date and unfair tax system a step closer to what better countries than ours have done.

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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.

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Yeah he’s a flaky fraud

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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. 

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I think this is great news, a few more policies like this will ensure they lose the next election as well. Go Labour !

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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.

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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.

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Nailed it. Less pain for workers, a little more pain for the landed gentry

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Its not surprising many of here don't like the idea of having to pay their fair share of tax. 

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Is >50% not enough for you? A bet you’re not even a net tax payer. Probably a bene that thinks they pay tax because an amount in nominally removed from their benefit. Please tell, how much is enough….is it 60, 70, 80%. Is it more or is it just how feel that day.

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At the average income 53k its 17.5% plus 15% GST. Fiji maths?

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The question was what a fair share. I pay over 50%. Is it fair or am I still not paying enough?

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Get an accountant.

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If you're paying over 50% in tax, that's suggests you really shouldn't be commenting on tax as you clearly haven't got a clue.

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Very average.

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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.

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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.

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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.

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Surely you refer to the >50% of households who pay no net income tax after transfers and credits 

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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.

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I've been waiting for them to leave for ages. But damnit all these supposed useful and productive people, they just don't seem to want to leave. Just a lot of hot air, much like their being " productive and useful".

Bring on the useless collapse.

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100% agree.

Those that don't believe the tax system needs fixing are those that are quietly benefiting from the inequity coded into it.

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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.

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  • "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.

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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

 

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Another excellent comment

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Pretty much, but there is one advantage to the prospect of government supplied services...governments are far less likely to bankrupt and have those services disappear....but you are correct, one way or another we will pay more, and probably for less.

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Labour would have bankrupted NZ if they stayed in office. 

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We will never know

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We are still on the same track if you have noticed already...

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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. 

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Labour = "trust us we know what is best for you!"

Labour want to control everything you do via the state.

National is Gutless to make the changes needed to fix the country.

The Green, TPM are wasted votes and divisive 

Google control everything you do via the WWW.

algorithms wrongly manipulate what you read

AI is a algorithm designed to give you a solution but take your info and sell it. Beware of people offering to think for you!

Cookies are evil 

Media spin everything based on the beliefs of the masters.

Your phone is not your friend

True freedom was pre the invention of computers

It's a race to the bottom if you choose to buy into all the crap.

Advertising is a farce. 90+% of it is never read but still paid for.. by you👀💥

 

I've gone to deep into the rabbit whole 

Bye! 😂😂😂

 

 

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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.

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Come on now, don’t let the facts get in the way of a good story. I know what you mean. I go to both of those places for work, pretty crappy and going down hill fast.

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Dripkins can postulate all he likes.

The Labour Govt. spent billions on the most outrageous, worthless projects this country's ever seen.

"A wealth tax would likely raise significantly more, but could come with unintended consequences."

I can 100% guarantee it.

 

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Yep, NZ's wealth would disappear overseas. Just make the caribean and Ireland more wealthy. A country with no wealth is what you call 3rd world.

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Might change careers and get into house moving, loading all of our houses onto boats to take with us seems like a lot of effort but it must be done. Young people don’t deserve a home to live in! Sorry, I mean my “wealth”.

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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. 

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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.

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