Gap between rich and poor set to increase under Tax Working Group's recommendations

Creating greater inequality by cutting taxes for the rich is bad for the economy, said Green Party Co-Leader Russel Norman today in response to the release of the findings of the Tax Working Group (the Group).

“The Tax Working Group’s main recommendation of aligning top personal tax rates with a corporate tax rate of 30% will create a chasm of social inequality between the richest and poorest in New Zealand,” said Dr Norman.

“It’s not fair to ask those earning less to pay disproportionately more in tax.”

The Group has found that significant levels of tax avoidance are taking place through company and trust vehicles. The Greens support a targeted strategy of closing these loopholes.

“The Group has got it wrong on personal tax levels. Internationally speaking, New Zealand already has some of the lowest top personal tax rates in the world. A move to make them even lower is a radical, hugely regressive step towards a flat tax system and a more unequal society.

“Almost every modern social and environmental problem — ill-health, violence, drugs, obesity, mental illness, big prison populations — is more likely to occur in a less equal society.”

To address the disproportionate levels of investment in unproductive assets like property, the Greens support a capital gains tax on investment properties — a progressive move that would broaden the tax base by nearly $4 billion.

“I don’t understand why the Group is shy on a capital gains tax when nearly every other developed nation has one. A capital gains tax is one of the most pragmatic ways to broaden the tax base,” said Dr Norman.

“The Greens are also disappointed that the Group failed to make any recommendations around the possible introduction of environmental taxes as a tax-broadening alternative.”

Eco-taxes enable tax relief while encouraging better environmental outcomes.

“Overall, the Tax Working Group’s cooked up a policy recipe for inequality, and inequality is bad for the economy, bad for us all,” added Dr Norman.

Link to the Tax Working Group Report:
http://www.victoria.ac.nz/sacl/cagtr/twg/Report.aspx