New Zealand Prime Minister Vows No Wealth, Capital Gains Tax Ahead of Election

Read More

New Zealand Prime Minister Chris Hipkins revealed that he struck down a wealth tax and capital gains tax (CGT) that the Labour Party had been working on for the 2023 budget.

“I’m confirming today that under a government I lead there will be no wealth or capital gains tax after the election. End of story,” Mr. Hipkins said on July 12, ahead of the general election in October.

“With many Kiwi households struggling, now is simply not the time for a big shake-up of our tax system.”

Mr. Hipkins is maintaining former Prime Minister Jacinda Ardern’s position against implementing a CGT.

Labour instead increased the top trustee tax rate from 33 to 39 percent to match the top income tax rate in the budget.

This change, the prime minister argued, would not drive inflation like the National’s proposed tax cuts.

“The reality is National’s tax cuts are unaffordable and inflationary,” he said.

“National’s uncosted and unfair tax changes would deliver the biggest cuts to millionaires and CEOs while offering while offering as little as $2 a week to some low–and middle-income households.”

Labour Can’t be Trusted, Says Nationals

But the centre-right National Party leader Christopher Luxon argued that Labour couldn’t be trusted on keeping its promise.

“The Coalition of Chaos is plainly divided on tax, with the Greens hugely in favour of wealth taxes and Labour fighting internally over them,” he said.

“The chaos has come before the coalition. There is a division within the parties on the Left and between them on this core aspect of economic policy.”

Under New Zealand’s mixed member proportional (MMP) system, the government is usually formed by a coalition of two or more political parties, and single-party governments are extremely rare. This gives minor parties greater influence on policymaking.

“You can’t trust Labour on tax. They ruled out the ute tax and brightline extension in 2020 and then promptly implemented them both after the election,” Mr. Luxon said.

“So expect these taxes to be back on the table if Kiwis are saddled with the Coalition of Chaos.”

David Seymour, leader of the minor conservative ACT party, agreed that a Labour-Green-Maori party coalition would “force” the prime minister to introduce one of these taxes.

“Hipkins is taking credit for ruling out a Capital Gains Tax and Wealth Tax under his leadership, but [Finance Minister] Grant Robertson and [Attorney-General] David Parker have made it clear they desperately want a Capital Gains Tax,” Mr. Seymour said.

“With potential coalition partners The Maori Party and Greens also calling for one, they will team up and force one on New Zealanders.”

Green Party Wants Wealth Tax

Indeed, co-leader of the Green Party, James Shaw, said introducing a wealth tax would require “political courage.”

“Nothing Labour says now will stop the Green Party from fighting for a fairer tax system,” he said.

“For too long, governments have been tinkering at the edges—constrained by self-imposed refusal to tax the wealthy—instead of taking the bold decisions people need right now.

“If political leaders are not willing to take those decisions on behalf of the people of the country you purport to lead, then why be in politics at all?”

Mr. Shaw referred to an investigation by Inland Revenue into how much tax the 311 wealthiest New Zealanders pay.

It found that the wealthy pay around 8.9 percent of their economic income in tax because high-wealth individuals derive a significant portion of their income from investment returns, with about 80 percent from capital gains.

“Right now, just 311 families own more wealth than the bottom two and a half million New Zealanders. That inequality is not an inevitability. It is a political decision,” Mr. Shaw said.

“Aotearoa [New Zealand] is a wealthy country. We have all the resources we need to give everyone a decent standard of living—we just don’t have Green Ministers at the table pushing for fair and sensible solutions on poverty, housing, climate, and nature.”

Going into the election, the Green Party is proposing an income guarantee policy that will redistribute wealth through a tax-free threshold of $10,000 (US$6,370) and a payment of $385 a week to anyone not working or studying.

To pay for this, they will impose a 2.5 percent wealth tax on assets above $2 million and a trust tax of 1.5 percent. Additionally, the Green Party will introduce a new top-income tax bracket of 45 percent for those earning over $180,000 and increase the corporate from 28 percent to 33 percent.