David Parker is one of the most important members of this Government and one of the most influential.
The current Government has said that it will not implement a full Capital Gains tax although it did implement an extension to the bright line tax for land sales which for all purposes was effectively a capital gains tax for land.
And Parker has continued with his work on showing that the wealthiest amongst us are doing rather well from the tax system.
From the Beehive website:
Inland Revenue research released today reveals a large differential between the tax rates ordinary New Zealanders pay on their full income compared with the super-wealthy, Revenue Minister David Parker says.
“This internationally ground-breaking research provides hard data showing that the wealthiest New Zealanders pay tax at much less than half the rate of other Kiwis,” David Parker said.
“The data, based on full income information from 311 of our wealthiest citizens, shows that the average person in this group pays an effective tax rate of just 8.9% tax on their economic income – that is, income from all sources, including capital gains on investments.
“In contrast, most New Zealanders pay tax at more than twice that rate. For example, someone earning a salary of $80,000, with no other income, pays 22% tax on that income, excluding GST.
“The difference is mainly because the very wealthy earn only a small portion of their income from wages and salaries, unlike most New Zealanders.
“The differential is even larger when GST is included: for the wealthiest, their effective tax rate rises to 9.5%, but for the person on an $80,000 salary, it goes up to around 28 or 29%. That is because wealthy New Zealanders spend a much smaller portion of their income each year, compared with other earners.”
The High Wealth Individuals Research Project is internationally significant because it uses real data, unlike other overseas studies which draw on surveys or scenarios, David Parker says.
“In 2020, the Government changed the law to enable IRD to require high-wealth individuals to provide their earnings data, in order to do this work,” David Parker says.
“To be clear, this work is not about chasing tax avoiders, nor is it about attacking the rich. Wealthy New Zealanders are usually hard-working and creative people who comply with current rules. They have assisted IRD with this inquiry, and I am grateful for that.
“The excellent work in this survey will enable future discussions on tax policy to be based on solid evidence. Later this year, we intend to introduce a Tax Principles Bill to ensure that information like this continues to be transparently collected and reported on.”
Today’s IRD report release is accompanied by a new Treasury report setting out effective average tax rates across the population. It uses scenarios to show that effective tax rates paid by middle New Zealanders (including GST) are between 6.8 and 10.8 percentage points higher than for the wealthiest people.
The question is what the Government will do with the report. Jacinda Ardern had ruled out a Capital Gains Tax while she was Prime Minister. To the best of my knowledge Chris Hipkins has not announced his position although given his Blairite approach to politics I do not anticipate anything radical. He is giving a speech today on economic matters so we should find out soon.
And meanwhile National has chosen to respond to the release of the report by advocating for, you will never guess, tax cuts for the very wealthy the report highlights. Be under no illusion if National gain power the only thing the uber wealthy will receive is some sort of tax relief.
Since the 1960s working group after working group have recommended a capital gains tax. Maybe what David Parker is doing is carefully and gradually opening the debate so that the current limited capital gains tax that we have can broadened and expanded.
Powered by WPtouch Mobile Suite for WordPress