It’s a legitimate concern - why would anyone want to give up more money to go towards taxes if they suspect it’s only going towards pay rises for MPs?
Any wealth tax should go towards paying for the essential services or infrastructure desperately needed by this country.
New Zealand is one of the few countries in the OECD that does not have a wealth or capital gains tax. It’s been a topic of contention for political leaders of all stripes over the years. In fact, ruling out the introduction of a capital gains tax might be one of the few things Labour and National seem to agree on - with former Prime Ministers Sir John Key and Dame Jacinda Ardern both refusing to introduce it during their tenures.
We’ve been here before. The country made some inroads last year, when the Labour government of the time commissioned an Inland Revenue study of the country’s 311 wealthiest families. The study found these families paid an effective tax rate of 9.4% - less than half the 20.2% rate the average New Zealander pays. What this means is nearly half the country’s wealthiest people pay a lower tax rate than minimum-wage workers. Often that’s because much of their income consists of capital gains, which aren’t usually taxed.
In response, then-Revenue Minister David Parker led the design of a wealth tax requiring couples with more than $10 million in assets to pay an annual levy of 1.5%. It was estimated to raise $3.8b in revenue that could have funded income tax cuts for almost everyone, including a 0% rate for income under $10,000.
Chris Hipkins, who was Prime Minister at the time, vetoed the idea and Parker stepped down from his role.
Now as the Opposition party, Labour is once again weighing the idea of a wealth tax. Research suggested a capital gains tax did not really affect the super-wealthy “so it won’t deal with the raging inequality that we’ve got at the moment”, Parker said.
One concern from those who oppose a wealth tax is that it would see rich people pack up and leave New Zealand.
Commerce Minister Andrew Bayly is one who shares that opinion, believing a wealth tax would drive people out of New Zealand, taking with them job opportunities for lower-income earners.
Parker disagrees, pointing out Treasury estimated 3% of our capital would leave and 97% would stay.
Plested is the latest but not the only wealthy New Zealander who is open to paying more taxes. Last year, a group of 96 wealthy people in New Zealand co-signed a letter telling the Government they should be paying more tax.
The group wrote an open letter to the public and politicians of Aotearoa explaining how frustrated they are at the amount of tax they pay, and expressing a wish to pay more.
As Sir Ian Taylor wrote in a column in the Herald last year, where he backed a capital gains tax but not a wealth tax, “when it comes to that three-letter word - TAX - politicians have developed an unerring ability to talk the talk without ever getting around to walking the walk, possibly because it is very difficult for them to talk, walk - and kick the can down the road - at the same time”.
For too long, politicians have refused to properly debate tax reform. It’s been in the too-hard basket for anyone in power, particularly as an election approaches. It is easy for Hipkins to discuss the issue when he is deep in Opposition territory (the proof will be what appears in any 2026 Labour manifesto). In the meantime, it’s incumbent we have a proper, grown-up discussion on taxes in this country. That should involve all political parties, working out what we want our taxes to pay for, and who should pay what.
