Christopher Luxon has denounced Inland Revenue’s report into how much tax the wealthiest New Zealanders pay, maintaining the country’s system is already “broadly” progressive and just.
That’s despite the report showing the wealthiest Kiwis pay tax at half the rate of the average middle-class bracket.
On Wednesday, Revenue Minister David Parker announced the details of the research – which found the wealthiest 311 New Zealand pay, on average, 8.9 percent tax on their income.
That’s largely because about 80 percent of their income comes in the form of capital gains.
Parker also revealed the findings of a separate Treasury study, which estimated the average Kiwi paid 20.2 percent tax on their income.
Pundits have said the reports were a “major wake-up call” about the unfairness of New Zealand’s tax system.
But, despite the major revelation, Luxon said he doesn’t understand why the political conversation has returned to tax.
“It looks like Labour, yet again, wants to go back to introducing a capital gains tax or a wealth tax,” the National leader told AM on Thursday.
“Chris Hipkins, on your show, [was] sitting on the fence – neither ruling it in or ruling it out.
“[The] previous Prime Minister’s been really clear about it because it really is dangerous having it as an open question in the economy,” Luxon said, referring to Jacinda Ardern’s refusal to introduce a capital gains tax while she was PM.
Luxon said talk of a capital gains tax was a “massive distraction”.
When AM host Ryan Bridge asked Luxon his personal beliefs on whether “uber-rich” people were paying their fair share of tax, the National leader didn’t give a clear answer.
“The issue really clearly is this is about good economic management and actually the wealthy and what they own, frankly, is irrelevant to the woman that I met at a budgeting service recently about to lose her home because this Government has mismanaged the economy.”
Luxon said the tax system was already “broadly fair and progressive”.
“Why are we having a conversation and distraction? The wealthy are not the problem here – the problem is the Government and the cause of the problem is the Government’s spending and printing of money and shutting the economy down and restricting growth.
“I’m not going to spend money like this Government’s spending money,” Luxon told Bridge.
National is proposing to adjust tax thresholds to inflation, meaning the brackets would be increased to help with the cost of living.
Discussing the IRD report with AM later on Thursday, Parker said the current tax system wasn’t fair.
“We have proven the effective tax rate of the super-wealthy and it is less than half. Sometimes it’s a third, actually, of what middle-income earners pay.
“From my perspective the tax system, at the moment, is unfair.”
Even after the IRD report’s release, Labour refuses to be drawn on what the party’s tax policy will consist of.
“We’re not playing the ‘rule it in or rule it out’ game – you’ll know our tax policy before the election,” Parker said.