Jacinda Ardern tried to clear up wealth tax rule-out, but ended up muddying the waters
Prime Minister Jacinda Ardern said she stood by “all the statements” she had made on whether Labour would implement a tax on wealth – despite some of those statements appearing to contradict each other.
Ardern has faced a flurry of questioning on the likelihood of Labour introducing a wealth tax after the next election, something which she had ruled-out earlier, but which now appears to be on the table after the next election.
“Our policy has not changed, we are not doing any additional work and I stand by all the statements I have made to date,” Ardern said.
Labour’s policy this term is to implement only the taxes it included in its 2020 election manifesto, like a new 39 per cent tax rate on income over $180,000. However, one of Ardern’s “statements” on tax went some way beyond this; during the 2020 election, she said she would not allow a wealth tax to “happen while… prime minister”.
On Monday, Ardern was asked multiple times whether she stood by this, and continued to rule out a wealth tax while prime minister. Despite saying she stood by her previous statements, she would only talk about the Government’s current tax policy, which exists in the current term and expires with the election in 2023.
“Of course we have always said our policy is not to introduce that and that is our position nothing has changed, we are not working on anything further” Ardern said.
“We are not doing any work on any additional tax policy,” she said.
“We have no other plans around any further work,” she said.
“My statements and positions have not changed,” she said.
However she would not discuss tax policy, or what was ruled in or out, beyond the current term.
The questioning was sparked by Revenue Minister David Parker last week who gave a speech on tax fairness and the research he has commissioned into how much tax is paid by the wealthiest New Zealanders.
Parker said that research was not being used to formulate tax policy, but he said it would be finished by the 2023 election and could feed into tax policies that political parties might want to design then and in the future.
“I have no intention of introducing a wealth tax here in this term and we are doing no further work on it,” Ardern said.
“Of course we have always said our policy is not to introduce that and that is our position nothing has changed,” she said.
Treasury papers that led to Parker commissioning this research estimated High Wealth Individuals (HWIs), people who are people worth more than $50 million, pay very little of their real economic incomes in tax.
Treasury reckoned 42 per cent of High Wealth Individuals (HWIs) pay less than 10 per cent of their total income in tax. Someone earning an income of $80,000 a year would pay more than twice this amount of tax, with an effective rate of 21.6 per cent.
This is mainly because high wealth individuals earn income from parts of the economy that are taxed lightly or not taxed at all. The result of Parker’s work could be to close some of these gaps and increase the amount of tax paid by the very wealthy.
This could include a tax on wealth.
However during the 2020 election, Prime Minister Jacinda Ardern ruled out implementing a tax on wealth while she was prime minister. This was in response to questions on whether Ardern would implement the wealth tax being campaigned on by the Green Party. That tax would have levied revenue from the top 6 per cent of wealthy New Zealanders.
“I have made my position and the Labour Party position absolutely clear. We have ruled it out. This is not up for discussion. It’s not in play. There is no need for the hypothetical. It won’t happen,” Ardern said.
Pushed again on the same question, she answered: “I won’t allow it to happen while I am Prime Minister.”
Ardern softened this significantly on Monday, only discussing the tax policy “this term” and not beyond.
National and Act said Ardern’s remarks left the door open for future taxes.
National’s finance spokeswoman Nicola Willis said Ardern “left the door wide open to even more new taxes on Kiwi households and businesses”.
Willis said Ardern’s remarks were “confusing and at times contradictory”, but she believed “Labour is dreaming up new ways to tax New Zealanders”.
Act leader David Seymour said the remarks suggested Ardern was “readying herself for the mother of all flip-flops”.
Ardern said Parker’s work was simply about checking if the tax system was still fair.
“With any policy or programme in the budget, you always check that it is doing what you intend. The Question David Parker and others are asking is ‘is everyone paying their fair share?'” Ardern said.
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