The Green Party’s latest tax policy is an echo of its strategy outlined last year, with its sights narrowed down onto top-bracket earners and companies.
It aims to provide $32 billion over four years – less than half of the $88b outlined in the 2025 strategy – largely by taxing the “super rich”: anyone with a net worth of over $10 million.
Green Party co-leader Chlöe Swarbrick says the package will provide a pay bump for 96 percent of New Zealanders by taxing those at the top, who are responsible for what she describes as a “cost of greed crisis”.
Of the $32b the plan aims for, over half is expected to come from the “super rich” tax: a 2.5 per annum tax on net assets above $10m for individuals and $20m for couples, excluding the family home. This tightens the 2025 plan, which set the bar at net assets of $2m and above.
These “super rich” taxes have been popular in left-wing circles for years. New York City’s new mayor Zohran Mamdani ran on a “tax the rich” platform, and recently levied a tax on private properties valued at more than US$1m which aren’t a primary residence. It is expected to generate US$500m in revenue.
Critics warned the super rich would simply leave the city, but this hasn’t happened in New York. In New Zealand, Treasury officials advised the Greens that for every percentage point of a wealth tax levied, 5 percent of the affected population could leave the country: a total of 12.5 percent under the Greens’ proposal. This calculation is baked into the final figures presented by the party.
This is not a large segment of the total population, and one Swarbrick thinks has enjoyed an easy ride with the current tax system. Swarbrick says multi-millionaires currently pay $9 for every $100 they make, while a teacher pays $22.
The super rich are also targeted by an inheritance and gift tax of 33 percent on items valued at above $1m – again, excluding the family home – under the Greens’ plan.
The Greens also anticipate a potential windfall in the form of a “big tech” tax.
The plan outlines an enforced 5 percent withholding tax on big tech companies like Google, Meta and Microsoft. These companies are able to pay very low taxes in their overseas operations by setting up a local subsidiary company, and then charging that subsidiary very high service fees, making the subsidiary’s profit extremely low on paper – thus also reducing the taxes paid.
The Greens’ document is careful to stress this strategy is not illegal, but argues these fees are “often, in substance, royalties that are supposed to be subjected to withholding taxes”.
Despite the strategy mentioning big tech companies, the withholding tax would apply to any sufficiently large organisation which is found to “misclassify royalties as service fees and licence fees”.
Elsewhere, mining industry royalties – as Newsroom has reported – are sometimes comparable to the costs of ongoing environmental cleanup.
Green Party senior press secretary Ryan Mearns tells Newsroom the policy modelling didn’t include the mining industry, “but it’s definitely something we’d want to look at”. It would depend if the company in question was found to be using this type of financial strategy.
To identify these companies, the Greens propose adding $100m in funding to the Inland Revenue Department to offset the increased workload.
Infometrics principal economist Brad Olsen writes in a report on the plan that a number of companies potentially in-scope were not included in the modelling, “so the potential revenue is likely greater.”
However, due to the scale of changes aimed at fundamental aspects of our tax system, Olsen says there may be overlapping effects which made the impact “difficult to assess”, even if the assumptions underwriting the proposals were all sound.
Big corporations across the board face higher taxes, not just those based overseas.
Any company with more than $30m in annual revenue would see its tax rate go up to 33 percent; companies below that threshold would remain at 28 percent.
The Greens also propose winding back measures implemented by the current coalition Government to ease the costs faced by landlords and homeowners.
Under the Greens’ plan, the bright-line test would be restored to 10 years and interest deductibility on residential properties would be removed.
The Greens’ headlining claim of a tax cut for 96 percent of New Zealanders comes in the form of shifted tax brackets.
Every earner’s income up to the first $9,999 would not be taxed, while the next $10,000 would be taxed at 10 percent. Tax brackets are defined in $20,000 increments from there, rising to 17.5 percent, 25.5 percent and 30.5 percent (up to $79,999). Income from there to $159,999 would be taxed at 33.5 percent, with anything over that taxed at 45 percent. Only 5 percent of New Zealanders earn more than $160,000 per year, and only the earnings above this threshold would be subject to the 45 percent tax rate.
Green Party co-leader Marama Davidson says the country has more than enough for everyone to enjoy good services, so long as everyone contributes fairly.
“New Zealand’s economy is the largest it’s ever been, with record profits being made by some. Yet the cost of living is through the roof for ordinary people, and our hospitals, schools, public transport, and environment are all starved of funding,” says Davidson.
Her co-leader Swarbrick says “people aren’t dumb”: they recognise the rising cost of living while seeing increased profits for those at the top of the pyramid.
Swarbrick thinks the cost of living crisis isn’t due to a lack of resources, but a hoarding of resources by those who enjoy a tax system which enables such behaviour: what she calls the “cost of greed crisis”.
National Party campaign chair Simeon Brown says the plan is “economic lunacy” while Act Party leader David Seymour says it “is taking from those who’ve succeeded already”: a description not far from the exact language used in the Greens’ announcement.
