Tax tools to rebuild a better New Zealand


Tax tools to rebuild a better New Zealand

Nā Tax Justice Aotearoa

New Zealanders have made sacrifices, stayed home, and turned our lives upside down, in the ultimate team effort against Covid-19.

But many of us still need help, especially people who have lost jobs or income, or whose businesses are in trouble. We’ve also seen how badly stretched some of our core public services are.

In coming years New Zealand will need more revenue so we can rebuild with physical and social infrastructure that supports everyone.

It is not for Tax Justice Aotearoa (TJA) to say exactly how much more revenue is needed. That is for all New Zealanders to decide. But current funding is clearly inadequate. 

In addition, the tax system should ensure the pain of the recovery is evenly spread. We should ask for a greater contribution from those who can most afford it.

TJA calls for three major changes so tax helps rebuild a more resilient and caring country:

HIGHER RATE FOR HIGHER INCOMES

Currently people on $700,000 pay the same top tax rate of 33% as people on $70,000. That makes little sense. In Australia, they’d pay 45%; in Denmark, 56%.

TJA proposes a new 50% tax rate on income over $150,000. This would reduce inequality, fund public services better, and help share the load for the rebuild.

NET WEALTH TAX

While most of us pay tax on every dollar we earn, the wealthiest often pay little in tax, IRD research shows. The majority of the wealthiest people even manage to avoid paying the highest tax rate.

We could redress this with a simple net wealth tax on the very wealthiest New Zealanders – a low rate annual levy of 2% on net wealth held over $2 million.

OPEN TAX SYSTEM

The New Zealand public has a right to know who is paying what, when and how. That is the only way to ensure everyone is playing by the rules.

TJA proposes improved disclosure and public access to tax-related information, and independent standards to make sure this information is comprehensive and accurate.

A THRIVING SOCIETY

Together these tax changes would raise billions of dollars to rebuild a society where we and our children can thrive.

They will help rescue people whose jobs and businesses have been destroyed by the coronavirus pandemic.

Recovering from Covid-19 requires new thinking on tax policies, for the upcoming election and beyond.

Let’s not waste our success in stopping the coronavirus. Let’s make sure our people in government have the tools they need to rebuild New Zealand even better.

The PSA is a member of Tax Justice Aotearoa, a network of people and organisations that seek greater transparency, equality and fairness in our tax system

 

A DIGITAL SERVICES TAX?

The PSA is also interested in the taxation of digital goods and/or services, usually referred to as a digital services tax.

The tax could raise revenue for recovery in a post-Covid world and focus on the global tech giants now making windfall profits, while other sectors and sources of tax revenue plummet.

It is an idea that is gaining popularity across the globe and over 30 jurisdictions have made changes in their current legislation to include a digital tax. Our Government has also looked at this and we would encourage it to reconsider the proposal.

 

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