Greens launch with plan for new top tax rate

Metiria Turei
Metiria Turei
The Green Party's policy of raising the top tax rate to generate close to $1 billion to tackle child poverty was not about penalising the rich but sharing the benefits more fairly, the party's co-leader said today.

If in Government the Greens would create a new top tax rate of 40 per cent for those earning above $140,000, co-leader Metiria Turei announced at the party's campaign launch in Auckland this afternoon.

The new top tax rate would impact only three per cent of all taxpayers, but the revenue raised would make "the world of difference to the hundreds of thousands of children living in poverty", she said. The tax threshold was set at $140,000 so MPs' salaries were captured.

"Our tax system is the key to solving poverty and reducing inequality. Our top rate of income tax is the seventh-lowest in the OECD", she said.

"Even at 40 percent, we'll still have one of the lowest top tax rates in the OECD."

The Greens would also harmonise the trust tax rate with the top income tax rate, and introduce measures to make it harder for people to avoid paying their fair share of tax -- generating close to $1b a year, she said.

The revenue generated would be invested in:

* A new Children's Credit that would give an extra $60 a week to families currently missing out -- at a cost of $400 million a year.

* A non-discriminatory Parental Tax Credit of $220 a week in the first weeks of life for the poorest children -- costing $29.4m a year.

* A $500m per year investment in children's health and education to reduce the harm caused by poverty.

New Zealand children growing up in poverty were three times more likely to be admitted to hospital, five times more likely to die of cot death, and 27 times more likely to get rheumatic fever, and die earlier than those who are better off, Mrs Turei said.

"Child poverty can be eliminated. We have the tools and techniques. It is now, simply a matter of choice."

"I want to be clear. The Green Party has no bone to pick with wealth -- the problem in New Zealand is not that some people earn more money, it's that the benefits need to be shared more fairly," Mrs Turei said.

The campaign launch was also attended by Booker prize winter Eleanor Catton and Phoenix Foundation singer Samuel Flynn Scott who urged voters to give their party vote to the Greens.

Catton said she was lucky to have grown up with a family who loved the outdoors and believed that mining in national parks and deep-sea oil drilling were disasters waiting to happen.

"I want my children and my children's children to be proud of the steps I took on their behalf to protect this country and what matters about it.

"That's why I'm giving my party vote to the Greens."

National's associate finance spokesman Steven Joyce said more taxes would result in a slower economy and fewer jobs. "Keeping with the plan is the best way of helping people."


Greens Tax policy doesn't add up

Lynden, you are incorrect; the proposed tax increase could not possible bring in $1 billion. Let me explain. The former 38% top tax rate cut in at $70,000 thus capturing around 339,000 middle and high earners. Mostly PAYE earners. The increase on top earners as proposed by the Green Party would affect only around 41,000 taxpayers as so few people earn over $140,000.  Many of these will be business owners.  If say, those high earners earn an average of $30,000 above $140,000 then the total possible tax increase is 7% of that so maximum of $86m.  That is assuming that shareholders of small companies don't restructure their businesses to mitigate the effects of a 40% tax rate.  One way would be to simply not pay out so much as shareholder salaries, leaving money in their companies to be taxed at 28%.   So the actual tax take from the proposed increase will be well under $86m. (Income Statistics from IRD website 2012, wage and salary distribution) This will go nowhere towards covering even their proposed children's credit of $400m.  I am concerned that the Greens show little understanding of how tax and the economy works and will stifle business in NZ if they have influence in the next government. 

Well meaning but missing the root cause

Although well meaning, this is just the ambulance at the bottom of the cliff. A better policy would be to address at the cause of child poverty and I fancy one will find the root cause is the wrong people having children with no real means to support them. Better encourage these people not to have children rather than throwing good money after bad.

A good start would be to stop providing weekly cash handouts to young women with no real job prospects to go out and have babies. This also has the bonus of reducing the burden on the taxpayer, hence you dont need to raise taxes.

I am also not convined that the new green energy economy and making clothes out of hemp and homespun is going to create the 10s of thousands of jobs needed now. I am sorry but I find most suppoters of the Greens either in well paid government posts like teachers and University lecturers or on benefits. I have yet to meet one in the producitive sector, although I think Nandor Tanczos had funnily enough a Hemp clothing business.

Glad you agree

Good to see you also agree that too much benefit money meant for child welfare is being spent on other non essential items such as beer, pokies, flat screen TVs and new cell phones. And I forgot to include Sky TV packages. Leaving children without adequate clothing, going hungry and living in unheated homes, and more betting money is supposed to eleviate this? Yeah right.

$1 billion

in reply to fmr ca's "will not bring in anywhere near the amounts they believe", it's well documented that $1 billion per year was the cost of National's top tier tax cuts from 38% to 33%, thus this proposed tax hike would easily raise the amount quoted. With the increase in top tier wages raising the overall average wage (the median wage has been static) and being 2% higher  it is likely that it would actually raise more.  

Greens' policies are so taxing

Yet another not well thought out policy from the Greens. 

Tax and spend parties

Not sure we want to move New Zealand's tax rates to align with the highest OECD countries, Metiria. Comprising only 34 countries in total featuring such economic luminaries as France, Greece, Italy, Portugal, Spain and Ireland. All these countries were overburdened by grasping socialist governments hell bent on over taxing and spending other people's money. All of them have had to drastically reset their economies.

How about this statistic instead; the Asian average top tax rate is 28%, North Amercica 34%. So why would we want to increase ours to 40%? We will have more businesses and talented individuals leaving in droves. And having a 12% margin between the company tax rate (28%) and the top individual and trust rate (40%) is bad policy. This proposed increase is wishful thinking by the Greens and will not bring in anywhere near the amounts they believe. All it does is provide work for accountants and lawyers for the next few years restructuring businesses back towards company ownership. And watch how many individuals would become contractors instead of employees. Face it Metiria, people will pay a fair and reasonable amount of tax. 33% is seen as generally fair, 40% is not.

'So-called poverty'

Care to elaborate how you perceive poverty in New Zealand as "so called poverty"? Perhaps you need to go and get your tunnel vision checked out by a doc, more than likely you can afford it... not that all of New Zealand can mind you because they go and buy new TV's and cellphones right?

More handouts with no accountability

To continue throwing money at this so called poverty is not the answer, this is only allowing those that continue to cry poor to buy more beer, increase their betting on the pokies and horses and buy the latest mobile phone or flat screen tv, they will never attempt to better themselves when you keep upping the handout without having to show where / how it is spent.

Vouchers or food coupons are what is required that cannot be spent on the things above, that way the very people who are missing out (the children) will receive what is necessary.Or stop breeding if you cannot afford to raise children, that is the true problem.