The Green Party has announced plans to raise the top tax rate on any income earned over $140,000 to 40 percent. This will have an impact on 3 percent of all taxpayers. We will redirect all new revenues raised into measures that will directly alleviate the causes of child poverty in New Zealand.
We don’t believe that poverty is inevitable in a decent society. Solving poverty is not impossible; it’s entirely possible. Our billion dollar child poverty package will be paid for with this tax increase and by harmonising the trust tax rate with the new top tax rate. And it’s only fair that those who earn more, progressively pay more.
This is what countries with low rates of child poverty do.
Even with a new top tax rate of 40 percent, New Zealand will still have one of the lowest top tax rates in the OECD, much lower than Australia and the UK (47%), the USA and Norway (48%), Canada (50%), Denmark (56%), and Finland (57%). New Zealand’s best off face no inheritance tax, no gift tax, and no capital gains tax to tax wealth.
There is no tax-free threshold for people on low incomes, like Australia, and New Zealand is one of the only OECD countries where GST, a regressive tax, is levied on all domestic purchases at a flat rate including food.
Our plans to use the tax system to solve one of our greatest moral challenges of our time – child poverty – are fiscally modest compared to the rest of the advanced world.