TODAY |

Greens pull support for Labour's top tax rate change

The Green Party will abstain from supporting Labour's top tax rate law change, that would create a new bracket of 39 per cent on income over $180.000. 

Green Party Co-Leaders Marama Davidson and James Shaw, left, and Labour Leader Jacinda Ardern. Source: 1 NEWS

Green co-leader James Shaw said it could "further increase inequality as high income earners are incentivised to shuffle even more money into property". 

"Increases in income tax, even at the top, with no taxes on asset wealth or capital gains just encourage people who own their own businesses and set their own high salaries, to arrange their finances in ways that reduce their income tax."

"Additional to inflating housing prices, the policy is predicted to only bring in a small amount of revenue, none of which has been earmarked to go to people living in poverty.

"It is because of these reasons that we could not in good conscience support legislation that is likely to lead to worsening wealth inequality."

Co-leader Marama Davidson said they could not vote in favour of a bill "that will likely exacerbate wealth inequality in New Zealand".

ACT's David Seymour said putting in a top tax rate of 39 per cent "disincentivises earning".

"It’s also no surprise the Government has signalled it will increase the rate it taxes trusts to 39 per cent if it finds people are finding ways to avoid the new 39 per cent income tax rate."

Finance Minister Grant Robertson called the policy a "balanced measure that is about sharing the load so everyone is doing their bit to help our country rebuild after our fight against the Covid-19 virus". 

Revenue Minister David Parker said it included "powers to collect information from trustees to test compliance and the effective operation of the 39 per cent tax rate and to further understand what trustees do with trust assets and income".

"If trusts are used for the sole purpose of paying a lower tax rate, it is unfair to all those New Zealanders that pay the right amount of tax.

"If there is evidence of this type of behaviour we will move on it."