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Labour's new tax rate proposal faces criticism from multiple parties, allies included

Labour leader Jacinda Ardern and National leader Judith Collins are both accusing the other's party of misinformation over Labour's new tax policy election promise.

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Judith Collins said Labour’s promise to introduce a new top tax rate was “a very short-term measure”. Source: 1 NEWS

Labour wants to introduce a new top tax rate of 39 per cent for income earned over $180,000. 

National criticised the move today, with finance spokesperson Paul Goldsmith saying, "no country in the world has ever taxed itself out of recession, but Labour’s first instinct is to raise your taxes". 

"Labour has predictably gone back to old habits after the failure of its capital gains tax this term.

"This is just the beginning."

Collins repeated the sentiment, explaining: "What we don't do as a country is tax our way out of a recession.

"It's really important we have money circuating in the economy and that that money is being spent on things in New Zealand and for New Zealand.

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With just over a month out from the election, both major parties are hard at work – and slinging barbs at each other. Source: 1 NEWS

"It's a very short-term measure... This is just the start."

Ardern categorized National's claims that Labour would "come after middle-income earners" as "misinformation".

"This is our policy," Ardern said. "Anything that comes from the Opposition should be characteristed as Opposition politics, and sadly it seems to be misinformation.

"Now is the time to provide New Zealanders with certainty and with confidence. 

"With this policy it ensures that we will not have, for instance, harsh cuts to health and education and we can keep a lid on debt and can have certainty over," she said. 

"This is a balanced approach. It means that we are affecting a small group that's less than two per cent. 

"We are at the same time bringing in revenue that will mean we can retain high quality of health and education services and keep a lid on debt." 

In response, Collins said what she heard from Labour's finance spokesperson Grant Robertson on the policy "characterises misinformation". 

"I'd say too, to Jacinda Ardern, stick to the facts, stick to the issues - I think people will be more impressed by that."

While announcing Labour's tax promise today, Robertson said National's "on again, off again debt target will only be achieved by massive cuts to public services". 

"It's a shambles, it doesn't add up and they represent a risk to New Zealand's fight against and recovery from Covid-19.

"With three leaders since Covid-19 began, it has been hard to get a handle on exactly what they will do."

Collins said she was waiting until the Pre-election Economic and Fiscal Update, which is held on September 16. 

Labour also saw light criticism from Green Party co-leader James Shaw, who said the promise "moved towards more progressive income tax, but is not addressing the growing wealth gap and inequality in Aotearoa". 

"It is tinkering that won’t address the long-term challenges.

"New Zealand has increasing poverty and inequality. This is now getting worse, because the Covid-19 response is increasing the wealth of those who own property and shares, whilst the median income of working New Zealanders is falling."

Green Party candidate Ricardo Menéndez called it a "Weetbix tax policy" that would "only entrench wealth inequality". 

The Green Party's own policy included raising income tax on income over $100,000 to 37% and to 42% on income over $150,000.

ACT's David Seymour said the proposal was "divisive populism and it will raise little revenue".

Auckland Action Against Poverty's Brooke Fiafia said the organisation is "disappointed that neither major political parties have committed to overhauling our welfare system".

When asked of his thoughts on Labour's tax proposal, NZ First leader Winston Peters said it was "going to have no effect on our fiscals what-so-ever and I cannot believe that's their only tax policy". 

"Well it doesn't kick in until $180,000 and for anybody above that, it's a cup of coffee a day."

Labour also promised to close "loopholes so multi-national corporations pay their fair share". 

"Labour will continue to work to get an international agreement that will see a comprehensive regime for multinational corporations to pay their fair share," Robertson said. 

"But we also need to be prepared to put in place our own rules to ensure fairness, if that agreement is not possible. We will be prepared to implement a digital services tax."