The Green Party of New Zealand has unveiled a bold and controversial tax policy, aiming to address the perceived 'cost of greed crisis' and fund income tax changes. This proposal, a scaled-back version of their previous plans, includes a wealth tax on net assets above $10 million and a revived inheritance tax, sparking intense debate among political opponents and the public alike.
Wealth Tax: A Super-Rich Target
The Greens' wealth tax proposal is a key feature of their strategy. They argue that taxing net assets above $10 million at 2.5% will address the 'cost of greed crisis' and fund income tax changes. This tax is designed to target the super-rich, with 99.7% of New Zealanders not being affected, according to the party's co-leader, Marama Davidson. However, the threshold of $10 million is significantly higher than the previous election's plan, which could be seen as a strategic move to avoid political backlash.
Inheritance Tax: A Controversial Revival
The introduction of a 'capital acquisitions tax' or inheritance tax, is a controversial aspect of the Greens' policy. This tax, charging 33% on inheritances over $1 million, has drawn criticism from ACT leader David Seymour, who branded it an attack on the motivation of New Zealanders to provide for their children. The Greens argue that this tax will apply to around 1100 people annually, and small gifts, family homes, and farms are exempt, ensuring a fair and targeted approach.
Income Tax Changes: A Tax Cut for Most
The proposed income tax changes aim to provide a tax cut for 96% of New Zealanders. This includes a new $10,000 tax-free threshold and a higher tax rate of 45% on income over $160,000. The Greens argue that this will reduce the tax burden on lower and middle-income earners while ensuring that the wealthy contribute more. The policy also includes a return to a 33% company tax rate for companies with annual turnover exceeding $30 million, and a 0.06% bank levy on the big four banks.
Economic Impact and Criticism
The Greens' tax policy has faced criticism from political opponents, with National's Christopher Luxon calling it a 'wrecking ball' for the economy. ACT leader David Seymour also attacked the policy, branding it an appeal to 'tall poppy syndrome'. The economic consultancy Infometrics, however, suggests that the costings are reasonable, though subject to the assumptions behind each policy. The Greens argue that their proposals will lift net government revenue and address the 'cost of greed crisis'.
Behavioral Changes and Enforcement
The Greens acknowledge the potential for wealthy individuals to rearrange their assets or relocate to avoid the tax. They argue that their costings account for behavioral changes and have been independently audited by Infometrics. The party also emphasizes the need to resource the Inland Revenue Department (IRD) to enforce the new taxes, with an estimated $3 million per year required for effective assessment and collection.
Conclusion: A Bold but Controversial Move
The Green Party's tax policy is a bold and controversial move, aiming to address income inequality and fund social programs. While it has faced criticism from political opponents, the Greens argue that it will benefit the majority of New Zealanders and address the 'cost of greed crisis'. The policy's success will depend on its implementation and the ability to navigate the potential challenges of behavioral changes and economic impacts.
