The Government's new 39 per cent top tax rate is hitting more than 50 per cent more people than Labour expected it to.
During the 2020 election Labour promised to create a new top tax bracket for very high earners, meaning instead of paying a maximum of 33 cents in the dollar on some income, high earners would be taxed at 39 per cent.
To ensure that few people fell into the new tax bracket, Labour said it would only kick in at income earned over $180,000, meaning just 2 per cent of earners would be hit by the tax.
IRD reckoned that worked out at 75,000 New Zealanders.
However, since the tax kicked in on April 1 last year, IRD ran the numbers again. Those numbers were released to the Herald under the Official Information Act and show that the "high-income population" is actually about 119,000 people - 44,000 people more than expected.
IRD said this number was "significantly higher than anticipated".
Revenue Minister David Parker cautioned the paper was "based on only part of the 2021 tax year and may be affected by the impacts of Covid so it is too early to be certain".
But National Party finance spokesman Simon Bridges said the tax take showed "rank incompetence".
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Advertise with NZME."Sounds like rank incompetence by IRD and Labour who used the figures - should be a no brainer for a tax department to work out which people fit where in the tax brackets," Bridges said.
He said the Government had "swept a whole lot more people into paying more tax, which incidentally they'll need for all the spending and borrowing".
Green Party finance spokeswoman Chlöe Swarbrick said the numbers showed that there was "one area of the tax system working as it should".
But she added that "unfortunately, the majority of the near trillion dollars of wealth transferred over the last two years hasn't been taxed like it should. While record numbers - tens of thousands - of New Zealander are forced to rely on food banks, those who own assets have profited".
IRD cautioned that the estimates could change, as people who had earned more than $180,000 in previous years - who IRD included in its figures - might earn less this year and drop out of the rankings. About 40 per cent of people who had earned upwards of $170,000 in 2019 and 2020 tax years had not yet filed returns, and were not due to file until March 2022.
These filings could adjust the figures if some people who earned more than $170,000 in the 2019 and 2020 tax years earned less in 2021, dropping out of IRD's calculation.
The numbers might also be because of lump sums of money paid out in redundancies as a result of Covid-19.
