Labour says it will lift the top tax rate on New Zealand's highest income earners from 33% to 36%, if it leads the next government.
In its alternative Budget presented today, the party said that if elected it will introduce a progressive top rate of 36c in the dollar for those who earned over $150,000 a year. Currently the top tax bracket is 33c in the dollar for income over $70,000 dollars a year.
Leader David Cunliffe says the extra tax take would help a future Labour government to pay down debt.
Finance spokesman David Parker says Labour will also “clamp down” on tax avoidance by multi-national corporations.
Mr Cunliffe says the new top rate of tax would affect just the top 2% of income earners.
The new rate, combined with the introduction of a comprehensive capital gains tax, would allow a Labour-led Government to run surpluses and pay off "National's record debt" by the end of its second term in government, he says.
'Same old tax and spend'
National has issued its response to labour's policy describing it as the opposition's usual approach to public finances.
“After nearly six years in Opposition, all Labour can come up with is a re-hash of its failed old recipe of taxing more and spending more,” Finance Minister Bill English says.
“Labour want to increase taxes so they can spend more without any focus on better results. They are out of touch with New Zealanders’ expectations that the measure of good government is better results, not more spending."
Mr English says Labour’s "complex" capital gains tax would slap a new tax on 2.3 million KiwiSavers and on every New Zealand farm and business without addressing the real issues around housing affordability.
“As for the proposed new top tax rate, it’s just the politics of envy. It wouldn’t actually raise much money, it would encourage those who could do so to shelter money in companies and it would ignore the fact that these taxpayers already pay 22 per cent of income tax - even though they are just 2 per cent of taxpayers.”
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Labour promises tax hikes for high income earners
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