Election 2023: Greens' new tax policies called 'envy-fuelled' by ACT, but James Shaw, Marama Davidson say it's about 'inclusion', 'collective care'

The Greens' election tax package is being welcomed by a poverty action group and unions, but ACT has also weighed in, accusing the party of proposing "envy-fuelled" tax hikes that "will make New Zealand a poorer nation".

But the Greens co-leaders have hit back at the claim their plan reflects a politics of envy, saying their proposal is instead about the politics of "inclusion" and "collective care".

"This is the politics of ensuring that actually we do want to ensure that every family has enough to put food on the table and a roof over their heads and to make sure that their kids have got decent clothes, and so on," said James Shaw. 

Meanwhile, the National Party argues the Greens' package is "fairy-tale economics" and would "gut the country of investment and opportunity as businesses flee offshore or simply shut up shop".

The Green Party announced on Sunday morning a series of new policies it believes will contribute to lifting every New Zealand family out of poverty.

They include a tax-free threshold of $10,000, adjustments to tax rates resulting in anyone earning under $125,000 receiving a tax cut, a replacement to the Jobseeker benefit and Working For Families, and payments to all tertiary students

These measures, expected to cost about $11 billion, would guarantee Kiwis' incomes never fall below $385 per week, the Greens said.

However, on the other side of the coin, the party also wants a 2.5 percent wealth tax on net wealth over $2 million, a trust tax of 1.5 percent, the corporate tax rate to be hiked from 28 percent to 33 percent and a new top income tax rate of 45 percent applied to any income over $180,000.

This is estimated to bring in about $15.5 billion once fully implemented. 

However, the ACT Party leader David Seymour believes the Greens' policies will make New Zealand poorer. 

"Their envy-fuelled series of tax hikes will make New Zealand a poorer nation. There is no law saying New Zealand must remain first world and the Greens appear to be hellbent on speeding up the decline," Seymour said.

"By making it harder to accumulate and protect your assets The Greens seem to want a more primitive society."

Seymour said the Greens are proposing "divide and rule envy taxes" and when looking for the "superrich bogeyman" might see themselves smiling back in the mirror. 

"It is middle New Zealand who use trusts for a variety of reasons. For example, parents concerned that their children might lose their inheritance in a future divorce might protect their assets in a trust. Small business owners trying to make a living for themselves might protect their house from creditors by putting it in a trust, so that if their business goes wrong their children have somewhere to sleep.

"Have the Greens really thought through who they're targeting?"

But Shaw denied the view that the new taxes and hikes reflected a politics of envy. He said it was about the "politics of inclusion". 

"The cost of allowing poverty to continue doesn't just fall on those families. It falls on all of us," he said.

His co-leader Marama Davidson said it was about the "politics of collective care".

"This is about everyone having a role, for a brighter outlook for all of us, not just a few of us."

Shaw cited research from Inland Revenue released earlier this year that found the effective tax rate paid by New Zealand's wealthiest families is less than half of that of middle-income Kiwis.

"All we're asking them to do is to pay what anybody else in this country would be paying," he said.

Shaw said many comparable nations have forms of wealth taxes or capital gains taxes so New Zealand is currently an "outlier". 

"I think in this country over the course of the last 30 or 40 years or so, we have had this mantra that the kind of simple tax system which only taxes things like goods and services or income is somehow a superior system. But what that is created is a tax system which actively exacerbates the gap."

He also stressed that the wealth tax would likely only be paid by about 0.7 percent of New Zealanders as there are few with net assets worth more than $2 million.

The ACT Party's alternative Budget also proposes tax changes. 

By 2025/26, it would have a two-rate system, where any income up to $70,000 is taxed at 17.5 percent and income above it is taxed at 28 percent. It also proposes several credits and refunds, while abolishing the bright-line test.

The party wants to make some large cuts to operating allowances. It believes it could reverse 50 percent of the increases made since Budget 2021 "providing us with sufficient room to cover inflationary pressures, but without exacerbating that inflation through reckless spending".

Among the policies it wants to cut are fees-free, 'demographic ministries', and some industry subsidies and grants.

The National Party, which is proposing to index tax thresholds to inflation, also took aim at the Greens' proposed new taxes. 

"You can’t tax your way to a stronger economy," said finance spokesperson Nicola Willis. "And it is only through a strong economy that we can lift incomes, solve the cost of living crisis and afford the public services that all Kiwis deserve."

She said this "tax grab" is what Kiwis can expect from "a Labour-Greens-Te Pāti Māori Coalition of Chaos", despite Labour not yet announcing its tax policy. 

The Labour Party's finance spokesperson Grant Robertson didn't comment on the specific policies announced by the Greens, but said Labour would be releasing its policy "shortly".

"I would note that Budget 2023 included aligning the trustee rate with the top 39 percent personal tax rate to make the tax system fairer."

Others to comment on the Greens' package include the Child Poverty Action Group (CPAG) which said the policies would rebalance the tax system. 

It was particularly happy to see a replacement to the Working for Families payment. The Greens are proposing parents would receive $215 every week for their first child and $135 per week for every subsequent child. Parents would receive an additional top-up of $140 a week for every child under three, with Best Start doubling.

"It is not the only thing that needs urgent attention but fixing Working For Families is the most obvious and easiest place to start in creating an economy that works for us all. It is good to see the bold moves by the Green Party," said CPAG economics spokesperson Prof Susan St John.

The Council of Trade Unions President Richard Wagstaff said working families would be better off under the Greens' plan. 

"A basic guaranteed income outlined in the plan, would also mean many New Zealanders would no longer depend on food banks and handouts to get by every week. That would be a game changer," he said.

"If we want to end poverty and tackle inequality, we desperately need policies like these."

Tax Justice Aotearoa said some of the policies, including the introduction of a tax-free threshold, would bring New Zealand into line with other countries. 

"We're pleased that the Greens' announcement addresses the impact of the tax system on the least well-off in society," said chair Glenn Barclay.

"We agree that wealth is not taxed in any meaningful way and policy change is needed to remedy tax inequities, so clearly highlighted by the recent IR research into high net worth individuals. A wealth tax would make a huge difference in addressing this."