The Green Party will abstain from a bill that will make slight changes to income tax brackets.
This is because it is not complemented by a tax on asset wealth or capital gains, including assets held in trusts, which means it is likely to further increase inequality as high income earners are incentivised to shuffle even more money into property.
Green Party Co-leader James Shaw said today:
“The last time the top tax rate was increased to 39 cents without also taxing wealth or capital gains, we saw house prices increase 17 percent because people channelled income into trusts instead, and those trusts invested in property.
“Increases in income tax, even at the top, with no taxes on asset wealth or capital gains just encourage people who own their own businesses and set their own high salaries, to arrange their finances in ways that reduce their income tax.
“This bill will just increase the distortion between income that is earned through work, and income that is earned through property investment and wealth accumulation.
“Property investors will likely continue to see significant increases in the value of their assets whilst those who are locked out of the market will find it even harder to get in.
“This is why, in the recent election campaign, the Greens campaigned on a platform of taxing wealth, not just income. Taxing income without taxing wealth just makes the problem worse.
“Additional to inflating housing prices, the policy is predicted to only bring in a small amount of revenue, none of which has been earmarked to go to people living in poverty.
“It is because of these reasons that we could not in good conscience support legislation that is likely to lead to worsening wealth inequality”.
Green Party Co-leader Marama Davidson said today:
“New Zealand has increasing poverty and inequality. This is now getting worse, because COVID-19 hurt working New Zealanders and their incomes, whilst asset owners continued to prosper.
“The Greens believe we should ask those who have benefitted the most to chip in a bit of what they’ve gained to help the people who need support during this crisis.
“Many New Zealanders will understand the clear solution that exists to address poverty and will be frustrated by the refusal to engage in all of the solutions available to us.
“We couldn’t vote in favour of a bill that will likely exacerbate wealth inequality in New Zealand”.