Politicians react after Chris Hipkins hints at tax system changes

Political parties are sharing their ideas on how they hope the Government will change the tax system after incoming Prime Minister Chris Hipkins hinted revisions were on the way.

Appearing on AM on Monday, Hipkins said he will focus on bread-and-butter issues, like the cost of living, in his new role. He also hinted tax changes could be on the cards, saying "we should always look at how we can make the tax system fairer". 

"I think overall there are some New Zealanders who perhaps aren't contributing their fair share [of taxes]," Hipkins told AM co-host Ryan Bridge

When asked who those Kiwis are, Hipkins avoided the question instead saying it's important hard-working New Zealanders can get ahead. 

"You've asked about values so I will start right at the core value. If you work hard you should be able to get ahead. There are people now working really, really hard, some of them might be working multiple jobs and they're not feeling that they can get ahead," he said.

"They are contributing enormously to New Zealand and to our prosperity but they are feeling that they're not able to get ahead. We need a tax system that recognises this, that actually makes sure that those who are really striving, who are putting in the hard yards, actually feel the reward for that."

But Hipkins confirmed his Government would stick to Labour's tax promise for this term, which is no new taxes outside of the new 39 percent tax rate.

Newshub asked the four other political parties currently in Parliament how they would like to see the tax system made "fairer" - which is what Hipkins said should always be looked at.

The Green Party's finance spokesperson, Julie Anne Genter, said while Hipkins' comments were "encouraging", there's a "long way to go".

"We need to redesign tax for a fair, equal Aotearoa with strong public services and income support so everyone has enough to live on," she told Newshub.

"The most straightforward solution is to introduce a capital gains tax or a wealth tax that could cover the net wealth of the top few percent - not including mortgages and other debt."

Genter also said excess corporate profits need to be taxed, and revenue from this could be used to lift "every single family out of poverty". 

"A transformed tax system in Aotearoa could provide vital support for public services like health and education, and to make sure those with the least have enough income to live with dignity," she added.

Meanwhile, the National Party's finance spokesperson, Nicola Willis, said Kiwis should be able to keep more of what they earn since they're paying "too much tax".

"We've already announced our plan to adjust tax brackets for inflation so someone on an average wage would be at least $800 a year better off.  Our plan would also deliver increased Super payments for every superannuitant," she told Newshub.

"New Zealanders can't trust Labour on tax. First they tried the KiwiSaver tax, and now they're planning a Jobs Tax to fund their proposed income insurance scheme, a gold-plated new welfare scheme."

While Hipkins didn't exactly say who should be contributing their "fair share" of tax, Willis said she isn't surprised Labour is looking for "yet more opportunities" to tax New Zealanders. She added that his Government's "only response" to the country's cost of living crisis has been to spend and increase taxes to pay for it.

"Labour needs to present a credible plan to address the underlying drivers of inflation and deliver results, rather than proposing yet more band-aids," Willis said.

"National has a plan to strengthen the economy, deliver tax relief for Kiwis, reduce the cost of living and lift incomes for all."

But, ACT leader David Seymour said New Zealand's tax system is "unfair on everyone" given the Government isn't spending carefully at a time when household budgets are "seriously squeezed".

"The Government needs to reduce wasteful spending, then reduce taxes so people can keep more of their own money," he told Newshub. 

"ACT's alternative budget for real change shows how all taxpayers could be better off without touching health or education, thanks to reductions in wasteful spending."

Newshub contacted Te Pāti Māori for its response to Hipkins' comments, but is yet to hear back.

Chris Hipkins.
Chris Hipkins. Photo credit: Getty Images

Also during his appearance on AM on Monday, Hipkins said it isn't just about tax, it's also about increasing New Zealanders' incomes. But he added the two go hand in hand, especially when it comes to Government-funded roles such as nurses and teachers. 

"I'll give you a practical, real-world example that I've dealt with over the last five and a half years. People have said to me, 'I'm a teacher or I'm a nurse and I could go to Australia and I could get a better salary in Australia'," he said.

"They pay overall higher rates of tax in Australia. Those taxes then pay the salaries of those teachers and those nurses. We can't divorce those issues. We need to increase incomes, tax is only one part of the conversation."

Hipkins also defended himself when questioned whether he has the financial and business know-how for the top job. 

"What I think I do bring is an understanding of the day-to-day lives of New Zealand families and the sort of pressure they will be facing, and the sort of things they are going to be concerned about," he said.

Hipkins said New Zealanders are facing increasing financial pressure as mortgage rates increase and the cost of basics such as food, petrol, and power spike - something he said he understands. 

"I understand what the issues are that are driving New Zealanders, and I want to make sure that my Government is absolutely focussed on those core bread and butter issues that are important to New Zealanders."