Since coming into Government, we’ve shown we can manage the economy responsibly and keep a lid on debt. We’ve continued to take a balanced approach through COVID-19, targeting investment to protect vital services like education and health, supporting people and businesses while keeping our debt levels lower than many other countries.
Here’s how our tax policy is supporting our careful economic management:
Easing pressure on business
In response to COVID, we’ve been helping affected businesses meet their tax obligations with greater flexibility. We’ve introduced business tax changes, including a provisional tax threshold lift, the reinstatement of building depreciation, and writing off interest on the late payment of tax. We also increased support for small and medium-sized businesses, including a tax loss carry-back scheme, changes to the tax loss continuity rules, and further business consultancy support.
Our recovery is focused on driving economic growth while addressing long term challenges like inequality and underinvestment in health facilities. We’ve put in place a new tax rate on the top 2% of earners to make sure all Kiwis are doing their bit. This tax rate of 39% on personal income earned over $180,000 will help keep debt under control, while protecting vital services like health and education. Other than this new tax rate, we’ve committed to no new taxes this term.
Cooling the housing market
We’re tipping the balance towards first home buyers by extending the bright-line test to ten years, which will dampen property speculation and help make housing more affordable. Since newly built homes are exempt from the extension to the bright-line test, this change will also boost housing supply, by encouraging people to invest in new builds. As part of our work to tackle the housing crisis, we’re also closing a tax loophole that benefits property speculators over first time and family home buyers.
Making multinationals pay their fair share
We’re working to level the playing field for Kiwi businesses, by ensuring that multinational companies pay their fair share of tax. For instance, we’ve passed legislation that charges higher interest rates on loans that move profits out of New Zealand. We’re also requiring foreign companies to collect GST on low-value goods sold into New Zealand.
- No income tax changes for 98% of Kiwis
- On personal income earned over $180,000 a new top tax rate of 39% will apply – this change affects 2% of earners
- Extra revenue raised will be used to protect health and education, control debt, and support the recovery plan
- No new taxes, or further increases to income tax next term
- We also won’t raise fuel taxes
- We’ll continue closing tax loopholes to make sure multinational corporations pay their fair share
- We will not introduce a capital gains tax under a Jacinda led Labour government
This policy is forecast to generate $550 million of revenue a year. The new tax rate for the top 2% of earners will help keep debt under control, while protecting vital services like health and education.
The new threshold matches Australia’s top tax threshold of A$180,000, but Australians earning over this threshold pay a higher rate of 47% (including a 2% Medicare levy).
Our proposed new rate applies to individual income. For example, a household with $240,000 of income through two people who both earn $120,000 will see no changes to their income tax - as both individuals are below the new top rate threshold of $180,000.
Our policy to close tax loopholes builds upon the major changes we’ve already made to target multinational corporations and prevent them from using loopholes to avoid New Zealand’s tax, and shift profits offshore.
We’re committed to continuing our work to hold these multinationals accountable and to make New Zealand a fairer place to do business for local Kiwi companies. Ultimately, this work is grounded in our belief that local New Zealand companies deserve a level-playing field when doing business.
Read more here.