ACT's David Seymour pokes fun at 'kooky' Greens, Chlöe Swarbrick hits back in debate over 'progressive' tax system

ACT leader David Seymour poked fun at the "kooky" Greens during a debate in Parliament as Green MP Chlöe Swarbrick defended the progressive income tax system. 

As MPs debated the annual rates of income tax on Tuesday night, Seymour took the time to highlight his opposition to the current tax system, because only a small chunk of Kiwis pay almost a quarter of income tax. 

"People who earn $150,000-plus - that is 3 percent of New Zealanders - pay 24 percent of all of the income tax in this country," Seymour said, citing Inland Revenue. 

Swarbrick could be heard describing it as "progressive" - and Seymour agreed, but perhaps not in the same way, sparking a clash of fundamental political beliefs. 

"Well, Chlöe Swarbrick, not much gets past you," he said. "Actually, of course it's progressive, but the point of the story is I don't think most people realise quite how progressive our current tax rates are, that 3 percent of New Zealanders end up paying 24 percent of all income tax."

Swarbrick asked how it compares internationally. 

"Oh, Chlöe Swarbrick, she's saying, 'What about internationally?' And that's the thing that the left love to do, when things aren't going their way they say, 'Oh, there's 200 countries in the world, I think I can think of one where things are worse'," Seymour said. 

"That's not the kind of aspirational culture I think New Zealand should have."

A 2017 report by Inland Revenue comparing New Zealand's tax system internationally showed we have a "relatively low top personal tax rate" but collect the "fifth-highest amount of personal income tax as a percentage of GDP" among OECD countries.  

Swarbrick pointed out that New Zealand was mentioned as a tax haven in the Panama Papers in 2016. The revelations showed foreigners used New Zealand to hide their wealth, which led to stronger rules around foreign trusts. 

"Oh, she's on about the Panama Papers!" Seymour said. "I mean, this is why the Green Party have the - sometimes, no disrespect - kooky reputation that they do."

He said the fundamental issue he has is that Government takes the attitude that the income tax system is "actually not progressive enough", and that "they feel if somebody has money, it's right to take it". 

Swarbrick told Newshub Seymour's point "proves the opposite" of what he wants it to. 

"It shows we have a deeply unequal society where a tiny proportion are paid that much more than the other 97 percent," she said. "As for all the narratives out there, I dare any politician to try and tell me that cleaners, teachers, nurses and our emergency workforce are not hard-working."

She highlighted Treasury data showing 42 percent of the wealthiest New Zealanders are paying a smaller effective tax rate than lowest-income New Zealanders.

"The wealthiest 10 percent of New Zealanders own nearly 70 percent of all the wealth - which is mostly in multiple properties. The bottom 50 percent of all of us own just 2 percent. That wealth inequality compounds. Poverty is expensive. Wealth pay dividends."

ACT leader David Seymour and Green MP Chlöe Swarbrick in Parliament.
ACT leader David Seymour and Green MP Chlöe Swarbrick in Parliament. Photo credit: Parliament TV

The income tax system in New Zealand is 'progressive' by definition, because it progresses from low to high - based on a taxpayer's ability to pay. The tax rate increases as the taxable amount of income increases.

The highest tax bracket was 33 percent on each dollar of income exceeding $70,000 and up to $180,000, until Labour promised to introduce a new bracket at the election - 39 percent on each dollar exceeding $180,000. 

Each dollar earned above $48,000 and up to $70,000 is taxed at 30 percent. 

But it's important to remember that at that level, the effective tax rate is about 18 percent because only income that falls between the $48,000-$70,000 brackets is taxed at that rate, while income that falls in the $14,000-$48,000 bracket is taxed at 17.5 percent. 

The lowest income tax bracket is 10.5 percent on each dollar of income up to $14,000. It's different to Australia, where income up to AU$18,200 (NZ$19,827) is not taxed. 

ACT favours income tax cuts. It would keep the lowest bracket the same, but on your next $56,000 you would pay only 17.5 percent, while the rate on income above $70,000 would remain at 33 percent.