Wealth taxes and 'guaranteed' income: How the Greens plan to fix inequality and reform welfare

The Greens are proposing every Kiwi has at least $325 a week to live on, paid for by the Government if they can't earn it elsewhere. 

And they want to pay for it by introducing wealth taxes and two new high-income tax brackets.

"For the past 30 years, Aotearoa's social safety net has trapped people in poverty, by keeping support payments too low and creating complex barriers to getting support," co-leader Marama Davidson said on Sunday.

"This means people who are out of work, students, single parents, and those with health conditions and disabilities are often under financial stress with few options to improve their lives - especially as housing costs continue to increase."

The 'Guaranteed Minimum Income' (GMI) policy will ensure everyone out of full-time work will have at least $325 a week. At present, the unemployment benefit can be as low as $175.48 after tax. 

Solo parents will get an extra $110 for a minimum income of $435 - about $60 higher than the present minimum rate. Davidson's predecessor Metiria Turei famously resigned in 2017 after admitting as a young solo mother in the 1990s, she'd cheated the system to get more money

The GMI would "replace all working-age benefits, including the student allowance", Davidson said.

"If you're one of the increasing number who work part-time - you would still get help. And if you've got kids or live with a disability, you'll get more. So you don't have to make the impossible choice between rent, power and groceries."

On top of this, the party wants to replace the Working For Families (WFF) tax credits - which have been criticised as discriminating against sole parents unable to work full-time - with a 'Family Support Credit' of $190 a week for the first child, and $120 for each of their younger siblings. The abatement threshold would be higher than it presently is for WFF, and payments would reduce at a lower rate as people's incomes rose.

These payments would be on top of the $110 a week solo parents are eligible for, "to recognise the incredibly difficult task of raising children on a single income". 

Marama Davidson.
Marama Davidson. Photo credit: Getty

The Greens are also proposing to raise the Best Start payment - currently $60 a week for children under one - to $100 a week for three years. 

"That's nappies, car seats and even bigger baby clothes," Davidson said. 

Another big-spending promise is reforming ACC from being the 'Accident Compensation Corporation' to an 'Agency for Comprehensive Care' that would ensure people still have incomes regardless of why they're off work - accident or illness.

"Gone will be the days when people are asked to provide humiliating proof again and again,"  Davidson said. 

Also, the party says it will get rid of the starting rate many young employees are paid, below the minimum wage, and guarantee minimum wage increases annually - once the economy has recovered from the impact of COVID-19. 

How they plan to pay for all this

Davidson is blunt about who will foot the bill for the pricey proposals - the rich.

"We have enough for everyone to live with dignity, but the system is rigged so a few have more than they will ever need, while far too many will always struggle. It is time to change this."

The party will start with two new income tax brackets - 37 percent at $100,000 and 42 percent at $150,000 - which will raise $1.3 billion a year.

But as learned in recent years, many Kiwis have been able to generate incomes through untaxed capital gains and tax avoidance. The Greens want to hit the richest 6 percent with wealth taxes.

"Those who have large amounts of wealth are not asked to contribute to help everyone else. This hole in the tax system has allowed most of Aotearoa's wealth to accumulate with a small number of people."

Statistics NZ in 2018 said the wealth of the bottom 40 percent of Kiwis hadn't changed in years, while the wealthiest 20 percent saw their fortunes skyrocket. 

An Oxfam report, also in 2018, found 1 percent of New Zealanders had hoarded 28 percent of new wealth generated the previous year - while the poorest 30 percent only got 1 percent of it. 

The Greens are calling for a 1 percent tax on net assets over $1 million and 2 percent over $2 million. Housing wealth under a mortgage wouldn't count, nor would "normal household goods worth less than $50,000", including vehicles. 

The party says this would raise $7.9 billion in its first year, "covering the GMI's costs". 

Davidson said the COVID-19 epidemic, which saw the livelihoods of many Kiwis unused to requiring Government assistance saved through the wage subsidy, shows "we never know when we might need help, and when we ask for it, it should be there".

"When someone reaches out, our first response should be to help - not to interrogate them, or demand that they prove their desperation. Because when a family member turns up at the door, you don't ask for receipts or question why they're there. You put the kettle on, give them a kai and you show manaaki."