The New Zealand Labour Party’s new tax plan includes the return of the 39 percent tax rate for incomes over NZD 180,000 (about $120,000)..
The measure is expected to raise NZD 550 million a year and affect 2 percent of taxpayers, the ruling party said on its website September 9. There would be no income tax changes for 98 percent of taxpayers, Labour said.
The 39 percent tax rate would apply to individuals earning NZD 180,000 or more, Grant Robertson, Labour spokesman and member of Parliament, said in a September 9 blog post. It would not apply to married couples with a joint income of $180,000 if they they make less individually, he noted.
Robertson said the New Zealand government had to borrow money to support 1.7 million workers with wage subsidies during the COVID-19 lockdown. In May Prime Minister Jacinda Ardern would not say how her government planned to pay off debt acquired during the economic crisis caused by the pandemic. She said it was not considering a wealth tax or a capital gains tax.
“Looking ahead we are now focused on keeping a lid on that [COVID-19] debt, while protecting the essential services like health and education that New Zealanders rely on,” said Robertson in the blog post. “We are striking a balance by asking the top 2 percent of earners to pitch in a little more to help the whole country recover and rebuild.”
The last time Labour introduced a 39 percent top income tax rate was in 2000 under the leadership of Prime Minister Helen Clark. The top rate was reduced to 33 percent in 2010 under Prime Minister John Key of the National Party.
Labour's tax plan says the government will not enact any new taxes, increase income taxes, or increase fuel taxes next term. It also says Labour will “continue closing tax loopholes to make sure multinational corporations pay their fair share.”
Deputy Prime Minister Winston Peters, leader of the New Zealand First Party, dismissed a wealth tax proposal from the Green Party in June, which the party had proposed to fund a guaranteed minimum income as part of its poverty action plan.