"Significant behaviour changes" needed to be factored into the Green Party’s wealth tax policy, such as people changing the value of their assets and moving funds offshore in tax schemes, the Prime Minister has said.
The Green Party yesterday announced a sweeping new policy that aims to reduce poverty in New Zealand ahead of the 2020 General Election.
Part of their policy would see a new tax introduced of 1 per cent on an individual’s net wealth above $1 million and 2 per cent over $2 million.
Jacinda Ardern today told media that when modelling policies like the Green's, “you do have to factor in behaviour change as a consequence”.
“Some of the assumptions around people’s change in behaviour, they aren’t necessarily factoring in a significant behaviour change which often tax amendments like this would drive,” said Ms Ardern.
“Also the fact that people would change the value of their assets in order to avoid tax, the fact that people will often move funds offshore and also I’m interested in the underlying modelling which is not necessarily something I’ve had access to.”
Though, Ms Ardern said the Greens do have a focus similar to Labour when it comes to income adequacy and poverty issues.
“But again, different approaches from different parties,” she said.
“If I’ve learnt anything from the work that has been done over a number of years in this Parliament, you do in your modelling have to build in some assumptions, reasonably significant, around behaviour change because people inevitably try and avoid new taxes that are put in place.”
The Green's policy also includes a Guaranteed Minimum Income which would provide anyone not in fulltime paid work, including students, at least $325 per week. It would replace both the student allowance and the basic jobseeker benefit, which pays $250 per week.
“We do have similar starting points in wanting to ensure that we lift children out of poverty, that we improve income adequacy but we’ll often have different ideas on how to do that," said Ms Ardern.
The Prime Minister said Labour would be releasing its own tax policy “in the future, we're not doing that today".