Greens promise $88b taxes including 33% inheritance tax for massive social safety net expansion

• The Green party released its alternative Budget on Wednesday.
• It promised $88.8b in new revenue over four years, comprised mainly of a wealth tax and inheritance tax.
• The plan was paired with income tax cuts for most workers and new social spending.

The Green Party is promising a radical overhaul of the New Zealand tax system, raising $88.8 billion in new revenue and taking the size of the state to over $200b a year.

The party also promises significant borrowings for investment not funded by taxation. The borrowings would take net core Crown debt to 53.8% of GDP by the end of the decade. In 2019, Treasury said debt-levels below 50-60% of GDP were prudent for New Zealand and warned that higher debt would make it more challenging to borrow during economic shocks like earthquakes.

The party announced its alternative Budget this morning, which was an altered version of its 2023 tax plan – the main differences being this one included two new taxes: an inheritance tax and a tax on private jets.

The plan would reinstate two property taxes: the 10-year bright-line test and banning interest deductions for residential property, which are currently being phased out.

Companies tax would be raised from 28% to 33%, making it one of the highest in the developed world, higher than Australia, the United Kingdom and the United States.

Income tax would be raised for some, with the 39% threshold kicking in at income over $120,000 and a 45% rate applied to income over $180,000.

However, a tax-free threshold would be introduced at $10,000, increasing the after-tax incomes of people earning less than $115,000 – the vast bulk of people, although setting the tax rate that low would begin to capture some professions the Greens are trying to target.

Thanks to a 2023 pay equity settlement, senior nurses had their pay lifted to between $105,704 and $153,060, meaning many would pay higher rates of income tax under this plan.

Mining royalties will be doubled and private jet arrivals and departures to New Zealand will be taxed at a rate of $5,000.

The big income raiser in the plan is the wealth tax, which would raise $72.4b over the four years.

The wealth tax would be a 2.5% tax on net assets, such as property and shares, over an individual threshold of $2m (or $4m for couples).

The net asset carveout means that someone with a multimillion-dollar home with a large mortgage might not be taxed. If someone owns $2.5m in assets, but owes $1m on their mortgage, their net wealth would be $1.5m and falls short of the threshold.

The inheritance tax component of the plan would mean inheritance or gifts would be taxed at 33%, but the tax would only kick in once a lifetime threshold of $1m had been reached.

Green Party co-leader Chlöe Swarbrick said it was a “Budget for a country that belongs to and works for New Zealanders”.

“We believe in fairness and common sense. A Green Government will rapidly reduce emissions, reduce the cost of living and improve our quality of life,” she said.

Health

In health, the party proposed introducing free GP and nurse visits nationwide, projected to cost about $8.5b over four years.

It was in addition to the party’s 2023 election campaign commitment to provide free dental care.

Green Party co-leader Marama Davidson argued the policy would reduce pressure on hospitals and would address health inequities.

As part of the package, the Greens would create “community care clinics” in high need areas like South Auckland.

The budget’s health commitments included building Dunedin Hospital, re-establishing an earlier bowel screening age for Māori and Pasifika, and bringing back the Māori Health Authority.

In childcare, the Greens proposed to expand 20-hours free care per week in early childhood education for children from 6 months up to school age with a cap on fees for hours above the entitlement.

Under the plan, the entitlement would increase to 35 hours in 2029.

The policy was expected to cost almost $5.4b over four years.

It formed part of the Greens’ effort to “wind down subsidies for commercial centres” with the hope of making the sector fully publicly funded.

“These for-profit providers benefit from hundreds of millions in public subsidies while charging high fees and paying low wages to teachers which impacts upon the quality of care,” Davidson said.

“Our budget covers the full cost of delivering quality ECE, ending subsidies to corporations and instead supporting community-based and public centres that prioritise the needs of our kids, not the interests of shareholders.”

Welfare

The budget featured another policy from 2023, introducing an income guarantee for students and the unemployed.

It sought to provide a weekly payment of at least $395 with top-ups of $140 per week for single parents.

The policy included reforming ACC to ensure anyone unemployed due to a health condition or disability was receiving at least 80% of the full-time minimum wage.

The party costed the package in excess of $30b over four years.

Early-Childhood Education semi-nationalised

The party is promising a radical shake-up of early-childhood education (ECE)

Currently, the Government directs billions in subsidies to private providers to fund subsidised services.

The Greens would change this, forcing any entity that receives the subsidy to transfer to a not-for-profit model.

The party is promising to provide 35 hours of free ECE for parents.