Labour pledges to hike top tax rate

David Cunliffe
David Cunliffe
Labour says it would raise the top personal tax rate 3 cents to 36 cents in the dollar in a shake-up of the tax system.

Its changes would also a crackdown on tax avoidance by multinationals.

As revealed by the Herald this morning, Labour says it would raise as much as $200 million a year in additional revenue by tackling tax avoidance by big international companies.

However, Labour Leader David Cunliffe today said Labour's fiscal plan would see a Government he led build "strong and sound fiscal foundations" by posting surpluses every year and paying off the National Government's "record debt" by the end of its second term.

He said Labour's spending would be "restrained" but revenue would be boosted by tax measures including a capital gains tax.

However, by raising the top personal tax rate to 36c for those earning $150,000 a year or more, Labour would raise almost $200 million in the 2015-16 year, rising to $350 million a year by 2020-21.

By aligning the tax rate for trusts with the new top tax rate, the use of trusts to avoid tax would be minimised and again, a further $200 million a year in revenue would flow into Crown coffers, rising to $336 million by 2020-21.

Mr Cunliffe said the tax hikes would mean wealthier New Zealanders were being asked to "return a small part of the very large tax cuts they received from the current Government".

Labour estimated the tax hike would affect 2 per cent of tax payers who earned on average $260,000 a year.

They had received tax cuts at a time New Zealand could not afford it and National had engaged in "unnecessary borrowing" to pay for them

- By Adam Bennett of the New Zealand Herald

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