The Opportunities Party wants each New Zealander to get $13,000 a year after COVID-19

One of New Zealand's minor political parties has suggested giving each Kiwi $13,000 a year in an effort to address flaws in the current tax and welfare system "laid bare" by the coronavirus pandemic.

The Opportunities Party's (TOP's) universal basic income (UBI) policy states every Kiwi child up to the age of 18 would also be given $2080 each year.

TOP, which failed to get a seat in Parliament after receiving 2.4 percent of the vote in the 2017 election, is also calling for a flat income tax rate of 33 percent in addition to the implementation of a UBI.

Former Treasury economist Geoff Simmons, who took over from Gareth Morgan as TOP leader after the election, says the changes would provide much-needed economic stimulus in the wake of the coronavirus crisis.

He says the "once-in-a-generation" reforms would make New Zealand's tax and welfare system "modern, simple and fair", and leave every working Kiwi with at least $3920 more after tax.

Full-time minimum wage earners would be $6285 better off, TOP calculates.

"As the economic fallout of the coronavirus pandemic deepens, many Kiwis are facing unparalleled financial insecurity. The UBI addresses many weaknesses of our current tax and welfare system, laid bare by the pandemic," Simmons said.

Effects of the flat tax and UBI on take-home pay.
Effects of the flat tax and UBI on take-home pay. Photo credit: The Opportunities Party

"By simplifying our welfare and tax system we estimate we will save $800 million per annum in reduced government bureaucracy, money we will hand back to taxpayers through a UBI."

Under TOP's most optimistic scenario planning, the UBI and flat tax reform alone may be sufficient to stimulate the economy back to life, Simmons says. Under conservative scenario planning, they have a neutral impact on the Government's books.

UBI has been proposed many times around the world but has rarely been implemented on a national level. However experiments - such as those in Kenya, Alaska and Iran - show a UBI has potential to boost health, school attendance and happiness, and reduce crime rates.

Critics argue that UBI discourages people from working and is unaffordable, though evidence suggests these fears are unfounded.

In addition to its income tax and UBI reforms, TOP wants New Zealand to phase in a risk-free return method (RFRM) tax on assets, to address the country's housing affordability problem.

"Our tax system for housing is the most distorted in the world, and fuelled by property speculation, which has resulted in progressively higher house prices and rents," says Simmons.

"The lack of a fair tax on housing has seen property become a tax-favoured asset, dramatically increasing poverty and skyrocketing house prices."

"Though the RFRM tax is likely to have a calming effect on house prices, its main purpose is to spread the tax base wider and to encourage investment in productive assets that will grow the size of the New Zealand economy."

Last year, the Government backed down from a capital gains tax designed to address inequalities in the tax system, after a poll showed New Zealanders were against the policy.

Prime Minister Jacinda Ardern said the tax could have helped resolve some inequality issues, but the Government was "unable to build a mandate" for it.