As a practical, principled response to the Christchurch earthquake, the Green Party is putting forward for discussion the idea of a small temporary earthquake levy on all income earners over $48,000 and/or cancelling the 2% reduction of corporate tax rates due to come into effect this year.
The Green Party asked the Parliamentary Library to model a number of different scenarios to understand the likely consequences for Government revenues and the additional tax people would face as a result.
The results are below. Download as a PDF [41KB]
How an earthquake levy could look
Green Party Research - March 2, 2011
As a practical, principled response to the Christchurch earthquake, the Green Party is putting forward for discussion the idea of a small temporary earthquake levy on all income earners over $48,000 and/or delaying the 2% reduction of corporate tax rates due to come into effect this year.
The Green Party asked the Parliamentary Library to model a number of different scenarios to understand the likely consequences for Government revenues and the additional tax people
would face as a result.
Scenario 1: A levy of 0.5% applied to an individual's income between $48,001-$70000 and a levy of 1.0% applied to an individual's taxable income greater than $70,001.
Scenario 2: A levy of 1.0% applied to an individual's income between $48,001-$70000 and a levy of 1.5% applied to an individual's taxable income greater than $70,001.
Scenario 3: A levy of 1.0% applied to an individual's income between $48,001-$70000 and a levy of 2.0% applied to an individual's taxable income greater than $70,001.
Scenario 4: A levy of 1.0% applied to an individual's income between $48,001-$70000 and a levy of 3.0% applied to an individual's taxable income greater than $70,001.
Scenario 5: A levy of 1.5% applied to an individual's income between $48,001-$70000 and a levy of 3.0% applied to an individual's taxable income greater than $70,001.
Scenario 6: A levy of 1.5% applied to an individual's income between $48,001-$70000, a levy of 3.0% applied to an individual's taxable income greater than $70,001, and the corporate
tax rate remaining unchanged at 30%.
Here's the new revenue raised by the different scenarios:
| Levy scenario options | Revenue raised (millions/year) Scenario 1 $229 |
| Scenario 1 | $229 |
| Scenario 2 | $375 |
| Scenario 3 | $457 |
| Scenario 4 | $622 |
| Scenario 5 | $686 |
| Scenario 6 | $1026 |
What impact will the different levy scenarios have on individual taxpayers? Here's the
additional weekly income tax New Zealanders will have to pay to help rebuild Christchurch:
Yearly income Weekly levy,
Yearly income | Weekly levy, Scenario 1 | Weekly levy, Scenario 2 | Weekly levy, Scenario 3 | Weekly levy, Scenario 4 | Weekly levy, Scenario 5 |
$50,000 | $0.19 | $0.38 | $0.38 | $0.38 | $0.58 |
$60,000 | $1.15 | $2.30 | $2.30 | $2.30 | $3.45 |
$70,000 | $2.11 | $4.22 | $4.22 | $4.22 | $6.33 |
$80,000 | $4.03 | $7.10 | $8.06 | $9.97 | $12.08 |
$90,000 | $5.95 | $9.97 | $11.89 | $15.73 | $17.84 |
$100,000 | $7.86 | $12.85 | $15.73 | $21.48 | $23.59 |
$125,000 | $12.66 | $20.04 | $25.32 | $35.86 | $37.97 |
$150,000 | $17.45 | $27.23 | $34.91 | $50.25 | $52.36 |
Note:
- Scenario 6 has an identical impact on incomes as Scenario 5.
- According to Budget 2010 (See page 8, Minister's Executive Summary), the corporate rate
reduction from 30% to 28% will decrease government revenue by $340 million. By not
proceeding with this cut as planned in April 1, 2011, the Government will hold onto an
additional $340 million in revenue.
