Cyclone Gabrielle: Windfall profit tax to support cleanup would make New Zealand 'Sicilian mafioso country' - David Seymour

  • 23/02/2023

Questions about how the Government will finance the massive cleanup from Cyclone Gabrielle are dividing the Beehive.

ACT is insistent on spending cuts, while National wants to borrow money for the rebuild. The Green Party, meanwhile, has proposed a windfall profit tax. 

Green MP Chlöe Swarbrick told AM there were some who could afford to contribute a little more.

"The major banks in this country have made $6 billion in profits last year - not because of anything particularly wonderful or amazing… that they did, but because of the economic circumstances that befell them," she said.

"What all of that means is that we have a situation where wealth inequality continues to increase in this country and there's an opportunity for us to address that inequality which, I might add, has also been increased by the likes of the flooding and the cyclone."

Excess profits would constitute anything above "regular" financial gains, she said.

"It's always going to be… a matter of where you draw the line but what we know is if we were to levy a 10 percent, temporary levy on those major banks, we could raise half a billion dollars which would go a really long way to covering the cost of the recovery," Swarbrick told AM host Ryan Bridge.

ACT leader David Seymour wants to cut Government spending by $7 billion - something the party already proposed last year. 

He acknowledged the cyclone cleanup bill could be more than that, "but before we start putting more taxes on people [and] before we start borrowing money adding to inflation and putting axes onto younger New Zealanders who will have to pay it back, we know that you could save at least $7 billion straight off the bat", he said.

"You imagine actually being on the board of a company and you're trying to get people to invest in your company, and one of the things you're obligated to tell people is, 'Look, we live in this Sicilian mafioso country where if we do too well, the tall poppy chops in and they'll just take money off us.'

"If you want to make New Zealand poorer, then abandoning the rule of law and certainty by running off with political populism and saying, 'Look, you do too well, we'll take your money' - that will make all of New Zealand worse off in the long-term."

National leader Christopher Luxon on Wednesday said a flood tax was a bad idea but thought the Government should borrow money for the rebuild.

Because inflation was running at 7.2 percent, the Government was "raising a huge amount of extra tax already", he told AM.

"You just know [the Government] will raise the tax and it will carry on doing dumb, pet ideological projects," Luxon said.

So far, Finance Minister Grant Robertson hasn't ruled out new taxes to pay for the clean-up.

"No decisions have been taken to change any tax settings further than what the Government has already done," Robertson said in Parliament on Wednesday, under questioning by National Finance spokesperson Nicola Willis.

"In light of the fact that we have had just the third ever national state of emergency declared in New Zealand's history and that many people's homes, livelihoods, businesses and lives have been devastated, it is the responsible thing to do to take the time to consider the options for how we will pay for the Government's share of the recovery."

Robertson said the Government's balance sheet was strong and had the ability to use the "fiscal headroom".