Prime Minister Jacinda Ardern says parts of NZ's tax system are unfair, refuses to rule out wealth tax

Prime Minister Jacinda Ardern said parts of New Zealand's tax system are unfair but refused to be drawn on what changes her Government might make if it is reelected. 

It comes after Revenue Minister David Parker announced the Government is gathering information on tax intake, specifically for New Zealand's wealthiest people. 

As part of the investigation, Inland Revenue is assessing how much goods and services tax (GST) people pay across income and wealth bands because data is limited on the effective overall GST rate paid by New Zealanders.

Inland Revenue is also investigating what rate of tax is paid by top earners. The current information, based on the Household Economic Survey, has "severe limitations at the top end", Parker said, because questions don't delve into capital income, for instance.

Parker also announced a proposed law, the Tax Principles Act, that would include "principles" to assess tax policies against. 

Speaking with AM on Monday, the Prime Minister said some parts of our tax system are unfair and need to be looked at. 

The investigation won't see new taxes introduced before the election though, with Ardern confirming she's sticking to her policy of no new taxes this term. 

The Prime Minister also refused to be drawn on the Government's tax plans if it wins the election next year. 

When AM co-host Ryan Bridge doubled down asking whether Ardern stood by her promise not to introduce a capital gains tax while she was in power, she said yes. But she wouldn't rule out a wealth tax. 

"You're asking me to project into the next election and beyond. I am not going to do that because we haven't formulated our tax policy for the 2023 election," she said. 

"All that Minister Parker is doing right now, and I think that New Zealanders would accept this is a good thing to do, is attempting to understand where the burden of tax currently falls."

When asked again whether she would rule out a stamp duty or wealth tax, Ardern said they haven't worked on their policy yet. 

"At the moment this is the work we want to gather. One of the examples that we have gathered is that in the survey work we have done it doesn't expose the fact that we have people whose incomes are over $20 million, it stops short of that so that tells us there is a gap in our system at the moment." 

The Prime Minister also said our tax system isn't fair but when asked why she isn't doing something about it, she said she hasn't worked on the policy yet. 

"You're asking me to set out a policy we just haven't worked on… we have not developed our 2023 policy.

"This is over a year out and what we are trying to do at the moment is make sure New Zealanders have all the information about our current system. 

"There are parts of our system that are really good, that are simple to understand relative to other countries. There are other parts, like Working for Families that try to redistribute and make our system fairer, but we are fairly confident that this activity, this exercise of getting information will tell us there are parts that aren't working so well."

The investigation has been criticised by National leader Christopher Luxon who said it's not clear what Parker is trying to achieve. 

Luxon said he believes the tax system is already fair but if the Government is really worried, it should implement National's proposed tax cuts instead.  

"What we support is a really fair tax system, it's important that wealthy people pay their fair share. We do think it's a fair, progressive system," he told AM last week. 

"If this is all about fairness why doesn't David Parker go to Parliament next week and actually pass our inflation-adjusted tax threshold because that would actually help the squeezed middle he's trying to talk to." 

National has proposed lifting tax brackets. Currently, each dollar you earn up to $14,000 is taxed at 10.5 percent, and then each dollar you earn between $14,000 and $48,000 is taxed at 17.5 percent. The next bracket is $48,000-$70,000, taxed at 30 percent. The next is $70,000-$180,000, taxed at 33 percent. Each dollar earned above $180,000 is taxed at 39 percent - the final bracket introduced by Labour after the 2020 election. 

National would lift almost all of the brackets by just over 11.5 percent, to match the 11.5 percent increase in the cost of living over the last four years. For example, the 10.5 percent tax rate would be applied to each dollar earned up to $15,600, instead of $14,000. The top tax bracket would be scrapped. 

The most typical salary in New Zealand is about $55,000, according to the Average Salary Survey. Those earning $55,000 would save about $800 a year if National's tax changes were applied. But someone earning $45,000 would only get about $112. Luxon would get an $18,000 tax cut under the package.