Te Pati Māori thinks huge changes are needed to fix a tax system that it says is broken and fuels extreme wealth inequality.
That includes removing all GST (goods and services tax) from food.
It says this is a regressive tax that hurts lower income whānau who end up spending nearly every cent they earn each week.
It adds removing GST on food would make a real difference for whānau who would in effect be able to buy seven week's food free when compared with current costs.
Te Pati Maori wants regulations passed to ensure that savings flow through to the consumer. The party also wants to shift the burden of tax from income to wealth.
"We are proposing to create a $30,000 tax free band which will help those on lower incomes," it says.
"The vast majority of whānau will receive a tax cut under our plan."
It says there would be 0% tax on income of $30,000 or less, 15% on income up to $60,000, 33% up to $90,000, 39% up to $180,000, 42% on income over $180,00 and 48% on income over $300,000.
There would also be a Net Wealth Tax. This would not apply to assets under $2 million. But the rate would be 2% for net wealth over $2 million, 4% for net wealth over $5 million and 8% for net wealth over $10 million.
The tax would be payable annually and would capture capital gains accrued. The rates exclude mortgages and other debts owing and would not affect most family homes or retirement savings.
It is expected to generate $23 billion annually.
The company tax rate would rise to 33%, generating $3.5 billion.
There would also be an Overseas Financial Transfer Tax, with the rate set at 2%. This is intended to capture profits from banks and multinational corporations like Facebook or Amazon.
To stop developers from “land-banking”, Te Pāti Māori would implement an Undeveloped Land Tax, which will be payable on all land that has not begun to be developed within four years of purchase.
It would be set at 33% of the increased land value, though Māori freehold and customary land would be exempt.
And, in a tilt at so-called "ghost houses", there would be an unoccupied dwelling tax. The party says when there is a housing crisis in Aotearoa, it is unacceptable for dwellings to be left empty for so long.
A similar scheme would be aimed at untenanted rentals.
In addition, there would be renewed attacks on tax evasion every year.
"The richest 10% own 50% of the wealth in this country, while the poorest half of the country own just 2%. Ordinary people are subsidising the lavish lifestyles of the rich. While the average person in Aotearoa is paying 20.2% in tax, the wealthy are only paying 9.4%," Te Pati Māori says.
We must shift the tax burden from the poor to the wealthy. It is time to eliminate poverty and restore fairness and economic justice in Aotearoa."
49 Comments
Some of this I quite like, actually. But the numbers don’t add up I’m afraid. $7b increased take from improved compliance looks like pure fantasy to me.
On a related note, what is labour thinking by refusing to adjust the bands? Seems like every other party has worked out that this is a no brainer. I suppose they don’t want to be the party of “tax cuts” but the current bands are dumb and frankly regressive.
Yeah, exactly. The bands are supposed to be indicative of relative points from the mean on a bell curve, like they were when they were set up. But right now they are stuffed down the left side of the bell curve instead.
Neither National or Labour want to talk about real tax reform cos they are status quo parties. But tax reform is desperately needed, which shows they are just caretaker governments, do nothing of real impact. So they are directly responsible for exacerbating the issues we currently have right throughout society instead of creating real change.
Correct. The ‘individualisation’ of title along with land confiscations (theft) effectively destroyed the Maori economy overnight. Now 170 years later the land we have left is totally unproductive or because of multiple ownership can’t be developed due to banks not being willing to lend.
It would be great if there was a way for local Maori communities to be able develop the potentially productive part of this land, maybe through appropriate legislative action helping with the issue of multiple ownership, or even with loans partially guaranteed by the government.
I wonder if this issue been investigated in depth by all parts concerned.
One partial solution I have heard proposed, is to facilitate swapping of ownership rights. I.e I swap my small share in one piece of land for an equivalent share in a piece I already have a larger share in. My small piece goes to someone with a larger share in that bit of land.
Problem is, it doesn't take long for the admin costs to be higher than the land value, and it would still take a long time to get ownership down to a usable level. Hard to sell the end benefits.
Careful, that comment isn't very helpful. I think it is more to do with taxing those who have wealth as the article suggests. Steer clear of inflammatory comments. Your comments at the bottom are much better!
I like the post by Blobbles earlier which said along the lines of Nat/Lab have just become caretaker governments not doing anything or promoting any policies to try and improve all New Zealanders lot. Someone's got to make a start somewhere in terms of changing things (Act, TOP, Greens, TPM).
Good Q. Not too sure how the rateable values work although in a lot of areas, the land is well off the beaten track with very little infrastructure. Have a look at the Maori land around Gisborne, Waipiro ;) and Bay of Plenty - pretty rugged stuff. Additionally the number of shareholders of such land who whakapapa back and have infinitesimally small holdings in multiple areas is staggering. So while no one person/entity owns the land, all shareholders have rights which follows your below threshold line.
What are the odds the new taxes comes in but not the associated cuts? Has any thought been given to the mobility of some of these high net worth individuals (for example Peter Jackson, sir Peter Theil and Sir Graham Hart already spend a lot of time overseas, pushing just the 3 of them to give up tax residency would create a multi billion dollar hole in this tax policy. Would they move to save a billion dollars a year? I would say very likely. The cost to them for the value they get from New Zealand would be very asymmetric. What happens if the cuts are implemented and then these 3 guys and a few other high worth individuals leave making a 10 billion hole in the policy? The wealth tax would need to be amended to cover something like 55% of the population to cover the hole created.
Peter Thiel doesn't live here, nor does he intend to. You can read details in The Herald article:
https://www.nzherald.co.nz/indepth/national/how-peter-thiel-got-new-zea…
He explicitly states that he won't reside here. He is a citizen in name only. As a result, the only tax he likely pays is council rates on his South Island property. His tax revenue won't be missed.
I guess it really depends on how replaceable these top 10%'ers are. If we're talking about Doctors and Specialists then sure the last thing we'd want is for them to take off to Australia. Otherwise, give it 6 months and I'm sure someone else will fill the gap that you leave.
Sure Peter Jackson can be replaced with an alternative director capable of driving huge tourist volumes to NZ 6 or so months after he leaves to avoid paying hundreds of millions, but what about Sir Peter Theil who would face a similar tax bill? Multi national Venture capitalist are rare in NZ and we already have very shallow capital markets here, do you genuinely believe that we could get new sources of funding for our startups within 6 months of him leaving? Richard Chandler, buys struggling companies and revives them whilst risking his own money in the process, I'd say replacing him within 6 months is a 50/50 thing, maybe?
The issue is that you are asking something like 40 - 50 people to pay two thirds of this tax, losing even a small number of them would have huge implications for the amount collected and it looks like no contingency has been allowed for this.
Why do we have 40 - 50 people paying two thirds of tax? Is it because Labour share of productivity gains is dwindling?
In 1997 the average CEO made 11x the average employee, in 2019 it was 18x and much higher than that. Let alone business owners. So no wonder those at the top are paying a bigger share of tax, they're taking a bigger share of the pie! Talk about fabricating a crisis..."oh I'm going to run away and never come back".
No, I don't agree with taxing "wealth". But incomes? Well, if wages are stagnating and living costs rising then *shrug* what can we do?
Also, haven't seen a start up from Theil in a while. There was a $4m photography start up in 2019?
https://www.renews.co.nz/nz-ceos-earn-up-to-88-times-more-than-employee…
New Zealand-based medtech startup HeartLab has raised $2.45 million in seed funding that it says will help the company expand its AI-powered heart scanning and reporting platform to cardiologists in the United States by early next year.
Great idea, not really one to create jobs infact potentially the opposite but will no doubt save a lot of lives so good on him.
But I know what you're saying, if we get too harsh on taxation Will Hewitt the 18 year old founder/innovator might decide to move overseas to jurisdictions that don't tax his income as heavy.
I agree though, cut spending. I think we should start with NZ Super and then see where we go from there.
Please provide proof that Peter Thiel pays any tax outside of council rates. He does not live here nor does he intend to. See the documents under which he was granted citizenship. He is citizen in name only and not a tax resident. And while Thiel may be a multinational venture capitalist, name one thing he has invested in (in a significant way) since become our most famous absentee citizen? New Zealand is an escape plan for Thiel and that is all. He's never been interested in paying taxes here.
Finally a party comes out with some much needed measures to redress the massive imbalance in our tax burden. Based on everyone paying their fair sharenacfording to their means. Not an envy tax at all. If some of those high nett worth individuals want to emigrate to avoid it then good riddance to them. I suspect that most of them will stay put and continue to make profits. Just not quite so much. Who knows, maybe they will feel good about contributing to the good of the country (infrastructure) and people (less poverty).
You are misinformed. You say massive imbalance in tax burden. The top 2.4% of tax payer pay 26% of the tax or put another way, those earning over $300,000 earn pay 31% of the tax. A wealth tax of 8% on assets over $10M would see the wealthy leaving without a second thought. Think for instance of Hart, worth around $8B. Tax him at 8% of his wealth and that's $640M a year he would need to pay. Firstly he wouldn't have the cashflow to pay this and secondly he would be gone to another jurisdiction before you could say Kia Ora. All very well for you to say good riddance if they leave, however if we lose even 1% of top tax payers it actually massively increases the burden for the rest of us.
There is a sentence missing from the above in regard to Wealth tax:
Missing sentence from the Maori Party's policy page is: "These rates will be less mortgages and other debts owing and will be for individuals and the combined net wealth of couples. "
My question is, as they say COMBINED, does that mean for couples they are going to charge you the wealth tax on anything over your net 2 million??? If so that is going to affect a lot of people who own their own homes and have retirement savings.
Whereas if your treated as individuals its 2 million each before you pay the wealth tax.
There would also be a Net Wealth Tax. This would not apply to assets under $2 million. But the rate would be 2% for net wealth over $2 million, 4% for net wealth over $5 million and 8% for net wealth over $10 million.
The tax would be payable annually and would capture capital gains accrued. The rates exclude mortgages and other debts owing and would not affect most family homes or retirement savings.
This policy reads like the type of thing that sounds intelligent at first glance but is going to be terribly expensive in terms of compliance costs and the economic losses that will occur as people move assets around to avoid it.
The ghost houses bit for example, is built off a figure that would have captured properties under construction, under renovation, or airbnbs.
The land banking tax is going to be impossible to do in practice, and completely unworkable in even mildly recessionary conditions (getting taxed 1/3 per annum on difference between purchase price and MV every year while waiting for demand for new houses/commercial/industrial/civic developments to pick up enough for developing the land to be worth it). Also, how will transferring these properties between different entities be treated? You'd do this constantly to avoid the tax and reset the tax basis.
The wealth tax would result in a taxable investor with 10m net wealth needing to make 9.6% per annum (assuming all income, not capital gains for simplicity) just to stand still in real terms. Effectively would mean 'noone is allowed to have more than $10m'. So they'll all move to Aus lol. Those that stay will invest offshore in order to achieve those sorts of returns consistently because the NZX ain't gonna do it for you.
They apparently think they can completely end tax evasion for $500m per annum.
They apparently think prices won't adjust upwards again once GST is taken off food, (and even more again due to large increase in purchasing power for low income households).
Just put in a CGT across all assets including the family home, LVT, and lower tax brackets to achieve tax neutrality.
They also havent cottoned on to the fact that hitting farmers with wealth taxes will cause the price of food grown in NZ to go up as the cash to pay it has to come from somewhere, so that GST saving will be eaten up by higher prices caused directly by a wealth tax.
Smells like socialism and communism to me.
Tax those who work hard even more, to the point where they are ready to leave NZ, and pay their tax in other countries. When the productive tax payers leave, the tax they pay will be $0, as opposed to what they pay now.
TPM is living in a fantasy dream, no wonder they poll so badly. Lack of understanding of business and economic principles. Instead of these incompetent ideas, how about TPM comes up with real policies that generate income, create jobs, and increase prosperity. Innovation, business ideas, opportunities. etc etc.. This is zero so far.
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