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Only half of NZ's most wealthy paying top tax rate

Some of New Zealand's wealthiest people are paying hardly any tax at all.

Figures given to ONE News show many of those worth more than $50 million are only paying tax on around $70,000 dollars of annual income.

When the tax man comes knocking, most of us expect to pay our fair share. But some of us can avoid it .

Even millionaire Gareth Morgan admits he's not paying his.

"Ah no, definitely not. But that's the way the tax regime is," he says.

Inland Revenue monitors 200 New Zealanders worth more than $50 million each. Yet 46.5% of those multi-millionaires earn less than $70,000 a year, meaning they avoid paying the top income tax rate.

"The system is so stupid that it allows people to do this," Mr Morgan says.

Tax lawyer James Coleman says he would suspect that most of them are working through trusts.

He says they're not doing anything illegal, simply using the system to their advantage.

"You can often get yourself in a lower tax bracket for some of your earnings than if you're trading personally in your own name," Mr Coleman says.

The top company tax rate is 28%. It's 33% for an individual.

Council of Trade Unions economist Bill Rosenberg wants companies and individuals taxed at the same rate and says trusts should be banned as tax shelters.

"The effort that you're putting into avoiding tax should go into creating wealth and jobs rather than tax avoidance," he says.

The Government introduced measures to combat tax avoidance in 2010.

Finance Minister Bill English is adamant there are fewer loop holes here now than in other countries.

"The rate of increase in the formation of trusts for instance, as I understand it, has slowed right down," he says.

But Gareth Morgan says that's not fast enough. He says the simple solution would be to tax all income, in cash or in kind, at 25%.

Figures show many worth more than $50 million are only paying tax on $70,000 worth of income. Source: 1 NEWS


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