No political party has put out a tax policy surprisingly
different than expected in the election campaign, although
Deloitte Dunedin tax partner Peter Truman was slightly
surprised by the Greens.
The Greens want a top tax rate of 40% on income earned above
$140,000 and all of the money to be used to help reduce child
For Mr Truman, the surprise is the top tax being called for
is above the 39% in place when National was first elected to
government in 2008 and above Labour Party policy of a top tax
rate of 36% above income earned above $150,000.
The Green policy would affect only 3% of the population but
claims have been made that some of New Zealand's ultra-rich
hide enough of their income to not be affected by an increase
in the top tax rate, no matter which party is in power.
Mr Truman said some asset-rich people did not have taxable
income of $140,000, as their money was invested in property.
That opened the debate about a capital gains tax.
If investors had geared up their asset base in commercial
property, the gains made there were not taxable under some
A capital gains tax might catch them, he said.
''There is no doubt the $140,000 limit does affect
higher-paid executives, politicians and plenty of people with
that sort of income who don't have any way to avoid income
tax at this level.
''The Greens and Labour also talk about the trust rate being
lifted to same high rate to give protection from people
trying to work their way around it.''
However, leaving the company rate at 28% might encourage
people to retain earnings within their company to avoid the
Once the earnings were dispersed as dividends to
shareholders, they were taxed at the recipient's usual tax
rate, Mr Truman said.
Asked about the benefits of retaining money in companies, Mr
Truman said the economy was better if off if earnings were
reinvested in business operations than spending it on
There were clear divides between the Right and Left political
spectrums on tax, he said.
National viewed lower income tax rates as a way of
encouraging people to become more productive and keep more of
their own money.
Labour and the Greens aligned tax policy with the wider
social framework, helping those less fortunate.
Social policy was already being delivered through the tax
system by working for families and tax credits as it was more
efficient using the tax system than having people file a tax
return each year or apply to Work and Income.
''As you know, most families working and receiving working
for families pay no net tax. That is social policy being
delivered in the most efficient way.''
Asked whether he and his fellow tax practitioners looked at
the tax policies and decided what they needed to do before an
election, Mr Truman said it was never too early to be aware
of what was being proposed and what impact a tax change might
have on an individual.
There was always the risk of higher rates encouraging
individuals to try to find ways around paying tax.
At a glance
• The National Party has not signalled any material change to
existing tax policy. Significant reform occurred with its
• Capital gains tax key policies of Labour, Greens and
• No tax on income for the first $20,000 earned by
individuals from Internet Mana, Conservative Party and Maori
• GST policies range from full abolition (Internet Mana)
through to removing GST from some items (New Zealand First
and Maori Party).
• Introduction of a financial transaction tax from Internet
Mana and Maori Party.
• Increased focus on tax avoidance, particularly corporates -
Labour, NZ First and Internet Mana - and use of trusts from
• Reintroduction of inheritance tax from Internet Mana.