Labour leader Chris Hipkins says New Zealand needs to fix 'broken' tax system

  • 24/03/2024

Labour leader Chris Hipkins says now is the time to have a debate about New Zealand's tax system, saying currently it's "inequitable", "unsustainable" and "broken".

Hipkins' comments came in his first major speech as Opposition Leader on Sunday.

"Yes, we need to talk about tax," he said, speaking at AUT's Manukau South Campus. 

"We have one of the least diversified tax systems in the world, meaning public investment into things like health, education, welfare, housing and infrastructure is more reliant on income tax than most other countries we compare ourselves to.

"In other words, those who earn their living through their salary and wages are contributing a greater share than those who earn income through wealth. Under this Government, those with multiple investment properties are getting huge tax breaks while those on salary and wages pay tax on every dollar they earn."

Hipkins also noted the International Monetary Fund (IMF) calling an overhaul of New Zealand's tax system to bolster investment, productivity and fairer. 

"As the way we live and work continues to change, with a smaller proportion of the workforce earning taxable salary and wages, reform of our tax system won't just be a matter for the idealists, it will be an economic necessity," Hipkins warned.

"Now is the time to have that debate. After the election I said that all options around changes to the tax system were back on the table and I meant it."

Ahead of the 2023 election, Hipkins ruled out introducing a capital gains or wealth tax. 

"I'm confirming today that under a Government I lead there will be no wealth or capital gains tax after the election. End of story," he said in July last year.

"With many Kiwi households struggling, now is simply not the time for a big shake-up of our tax system."

However, after the election loss, the party put tax reform back on the table

Now, Hipkins says his party is set to release a series of discussion documents on key issues it will be working on over the next two years - one of those will be on tax. 

"It will set out some of our options for future tax policy. It's intended to help inform the debate, but how we shape it will be up to us," he said on Sunday.

Hipkins' comments come as he hit back at the new National-led coalition Government, calling it "heartless and cruel", and accused it of running the nation like a business rather than country.

"Our country is not a company and our citizens are not just consumers," he said.

"More people smoking might be good for the Government's bottom line but it won't make for a healthier society. Cutting school lunches and support for those with disabilities might help [Finance Minister] Nicola Willis balance the Budget, but at what cost to those who will miss out?"

Hipkins said he accepts New Zealanders voted for change at the last election, but asked whether the change they are getting is the change they voted for.

"This Government's lower spending goal simply means they take from the many to give to the few - and life will only get worse for most people," he said. 

"This National-led Government believes its role is to do things to people rather than with them. It is a Government of entrenched privilege and entitlement.   

"Our country is not a company, and it shouldn't be governed as if it is… Not every Government decision comes down to what is best for the bottom line. 

"Kiwis deserve a Government that puts people first. We deserve a Government that backs Kiwis to come together to support and help each other to thrive."