Friday, July 28, 2023

Point of Order: The Maori Party proposes a “Robin Hood-style” tax policy

Is it the shape of NZ’s future?

The Maori Party has announced a tax policy which – by appealing to low-income groups – could give it a stronger voice in the next Parliament.

The party promises to be “staunch” in coalition negotiations to achieve its tax plan, raising the question: is this the shape of our future tax system?

As Stuff headlined their report: “Te Pati Maori lobs a grenade into election tax debate”.

Co-leaders Rawiri Waititi and Debbie Ngarewa-Packer say they are campaigning on massive tax cuts for most workers, but will impose new taxes for companies, the rich and landowners.

The key points of the tax policy are:

  • Two new income tax rates of 42% and 48%
  • An asset tax of up to 8% per annum
  • Increased company tax rate of 28%
  • A 2% financial transfer tax on overseas transfers
  • A 33% tax on undeveloped land
  • A 33% tax on rental houses without tenants.
They claim this will allow everyone else to pay no tax on the first $30,000 of income.

Waititi positioned the policy as a Robin Hood-style reimagining of the tax system.

He and Ngarewa-Packer called it a “radical” plan, and said they would be “staunch” in coalition negotiations to achieve tax reform.

Ngarewa-Packer said the current system had the poor “subsidising the extravagant lifestyles of the rich”.

“Our tax system is doing exactly what it was designed to do, take money from the poor and give it to the rich,” said Waititi.

By the Māori Party’s own estimates, its new tax policy would gather up to $16.4bn more revenue than the existing tax settings. A big chunk of that, $7bn, would come from the party’s promise to “end tax evasion” by investing an extra $500m into the Serious Fraud Office.

Waititi said the extra tax take would be enough to fund the party’s other policies – set to be announced across the campaign – to tackle poverty, housing, health and education inequities.

The party’s new tax policy came alongside the revival of its policy to remove all GST from all food.

The party says its estimates are based on analysis by party economic advisers using models from the Parliamentary Library and data from IRD, Stats NZ, the Tax Working Group, and Treasury Budget advice.

The party’s policy document underlined what it called a broken tax system that had led to the biggest wealth transfer in generations, “from hard working whānau to greedy property developers and landlords”.

Ngarewa-Packer blamed government inaction on housing, and the Covid-19 response.

“Now is the time for radical change,” she said.

“Our tamariki are literally hungry for it.”

Waititi said the tax system was doing what it had been designed to do – “Take money from the poor and give it to the rich”.

“We believe in an Aotearoa Hou where ordinary people don’t have to subsidise the extravagant lifestyles of the rich. No one should go hungry while supermarkets are making record profits. No one should be homeless when there are enough vacant houses to house everybody. Whānau should not have to choose between paying their bills on time or taking their babies to the doctor.”

Another prospective coalition partner for Labour, the Green Party, has proposed a tax-free threshold on earnings under $10,000, increasing the rate for earnings over $180,000 to to 45%, and a 2.5% wealth tax on net assets over $2m.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton


Richard Treadgold said...

Taking nearly half your income in tax destroys the incentive to learn more or work harder. It is unjustified.

Our family home, which happily accommodates three generations, but suddenly valued at about $1.2 million after the recent wild speculative bubble, would be taxed at an unaffordable, rapacious $96,000 per year. Nobody would want the property, so we'd get a pittance at sale, our assets and security would be gone and we'd be unable to contribute to the community as we now do.

At least an increased company tax rate of 28% would sting the gigantic Maori corporations. Or it would if they still had to pay tax, so who knows?

A 33% tax on undeveloped land is a very good idea and would stimulate fabulous growth, but it must be balanced by removing all tax on income. Nobody can pay both. I don't suppose we would see this tax apply to the huge amounts of undeveloped Maori land.

A 33% tax on rental houses without tenants? Where are such houses? Who is hanging on to them? Is the goal to force their sale?

Taken together, these policies will be very disruptive and will send even more of us racing across the Tasman.

Anonymous said...

Perhaps if Māori incorporations and any untaxed iwi businesses were to pay tax like everyone else, the country would be in a far better economic state and there’d be no need to increase taxes for the so-called wealthy.

Anonymous said...

But will they tax those multi-million/billion dollar Maori Corporations, or are they to remain more or less tax exempt as charities?

Given enough time, with that tax-free status, they will end up controlling everything. Just like times past - 'cept no warring neighbour can come steal it off them - leastwise for now while we still have colonial laws and some semblance of order.