NZ Election 2020: National unveils document warning elderly how wealth tax could hit them

National has unveiled a document warning the elderly how the Greens' wealth tax policy could hit them if their partner passes away. 

The Greens have proposed a wealth tax where assets over $1 million would be taxed at 1 percent and wealth over $2 million would be taxed at 2 percent.

But the wealth tax would only apply to net wealth after mortgages and debts are taken into account. What that means is only the amount that you actually own counts towards this - having a mortgage won't. 

Everything up to $1 million would attract no tax. So, if your house is worth $1.2 million but you've got a $700,000 mortgage, your net wealth is $500,000, and you won't pay any tax. 

But if your house is worth $1.2 million and you own it outright, you'll be taxed 1 percent of the $200,000 above $1 million, and your contribution will be $2000 a year. 

The tax is levied on individuals. So, if you jointly own that $1.2 million mortgage-free house with a partner, then your net wealth will be $600,000 each and below the threshold. 

That's the area where National has raised concerns for the elderly. 

In a document released as part of its seniors’ policy on Wednesday, National provided an example of how couples could get caught in the tax if their partner died. 

National provided an example of a couple in their mid-70s living on a property worth $1.4 million. They also have a pension fund with $500,000 in savings. The couple avoid the wealth tax as they can split their $1.9 million in wealth across the two of them. 

"Sadly, Jack suffers a terminal disease and passes away. All assets are left to Edith who now has $1.9 million in net wealth. Edith is charged a Wealth Tax of $9000 per year, or $170 a week," the example says. 

"As Edith has the ability to withdraw cash from the pension fund she is forced to pay the Wealth Tax each week. She faces a choice of selling the house she has or reducing her weekly spending in order to pay the $170 per week."

The Greens say if you're asset rich but income poor, there will be an option to defer payments until such time as an asset is sold. 

"Now make no mistake, this is a transformational change, but if we truly want to end poverty in Aotearoa, we need to be bold," Green Party co-leader James Shaw said in a video posted to Twitter. "And this is just a much fairer, much simpler way for us to help each other out when times are tough."

The Greens say the wealth tax would cover about 6 percent of the wealthiest New Zealanders, but National says "this is only at one moment in time" and that most Kiwis will end up paying it at some point in their lives.

"The Green Party likes to imagine a Wealth Tax would only impact a super-rich few. In reality, most people have little wealth when they start out in the workforce and build their wealth over their lives," the document says. 

"People will build wealth as they gradually pay off a mortgage and save for retirement. Someone reaching retirement with a mortgage-free house, money in KiwiSaver and their own savings will often find themselves with more than $1 million in net wealth." 

Shaw says New Zealanders have "enough to go around" and the Green Party "has a plan to make sure that all New Zealanders can live prosperous, fulfilling lives, no matter what crises life throws at us". 

Labour has categorically ruled out introducing a wealth tax, but the Greens have hinted that it would be an important part of any coalition negotiations after the election. 

Green MP Chlöe Swarbrick told Magic Talk there are "ongoing discussions" about walking away from a post-election deal with Labour if the Greens don't get what they want.

National's seniors’ policy promises to establish a Seniors Commissioner, maintain Labour's winter energy payment, and also keep NZ First's Super Gold Card.