Going hard and early in response to COVID-19 meant taking on more debt. This paid for policies like the Wage Subsidy which protected 1.7 million jobs and gave businesses and workers confidence during the first lockdown. Even with this increased spending though, careful financial management has kept our debt lower than other countries.
Now, our balanced plan protects vital services like education and health and keeps a lid on debt. Getting the balance right is critical as we continue to manage the impacts of COVID-19 and invest in the recovery.
Labour’s tax plan
- 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.
Labour’s achievements to date
During the COVID crisis
We rolled out a number of changes through the tax system as part of the Government’s economic response to COVID, including:
- Backing businesses through $2.8b in business tax changes to reduce cashflow pressure, including a provisional tax threshold lift, the reinstatement of building depreciation, and writing off interest on the late payment of tax.
- Increasing support for small and medium-sized businesses, including a $3.1b tax loss carry-back scheme, changes to the tax loss continuity rules and further business consultancy support
- Helping affected businesses to meet their tax obligations with greater flexibility
- Providing assistance for small business with an interest-free loan scheme of up to $100,000 to firms employing 50 or fewer full time equivalent employees
Before the COVID crisis
We introduced changes to improve our tax system to make sure everyone is paying their fair share, including by:
- Ensuring companies who work multi-nationally pay their fair share of tax, through the Taxation (Neutralising Base Erosion and Profit Shifting) Act, which introduces a number of measures such as charging higher interest rates on loans that move profits out of New Zealand
- Addressing property speculation by extending the bright-line test
- Stopping property investors from being able to ring-fence rental property losses so they can pay less tax on other income
- Levelling the playing field for New Zealand companies by requiring foreign companies to collect GST on low-value goods sold into New Zealand
- Backing more than one million Kiwis by eliminating secondary tax and automating tax refunds through IR’s Business Transformation programme.