Greens co-leader Russel Norman has proposed the introduction of a temporary levy on higher income earners to pay to rebuild Christchurch after the earthquake.
He argued a levy similar to the one imposed in Australia to pay for flood damage would be fairer and mean the government would not have to add to debt.
"A small temporary earthquake levy does appear to offer a fair way for all of us to do our bit to contribute to Christchurch’s recovery without adding to Government debt," Norman said.
"To make it fair, the levy would fall on those most able to pay it. Those earning between NZ$48,000 and NZ$70,000 a year could pay up to an additional one per cent income tax, while those earning over NZ$70,000 could pay up to an additional two per cent income tax to help pay for the reconstruction of Christchurch," Norman said in this blog post on Frogblog.
"People earning less than NZ$48,000 and all those living in the Christchurch region would be exempt from paying the levy," he said.
Such a levy would raise NZ$921 million per year and be tagged for disaster relief and reconstruction, he said.
Prime Minister John Key has left open the possibility of an earthquake levy, but has said he would prefer not to impose such a levy.
Key has said this was one of the issues Treasury would consider in coming weeks as it reassessed the government's budget situation.
Economists have estimated the rebuilding cost at more than NZ$10 billion. The EQC has reserves and reinsurance for the first NZ$4 billion while private insurers will also cover insured damage to commercial and residential buildings.
But public infrastructure such as roads, surage, water and government buildings was not covered and would have to be paid for by central government.
See more here from Norman's post.
There are those who argue against such a levy. Australia’s flood levy has been attacked by the Right who argue that further government cutbacks are the best way to find the necessary funds to pay for their flood damage. And a new, albeit tiny, tax raise for upper-income earners goes against the Key Government’s current pathway towards a flat tax structure. And of course we have already paid into the EQC kitty over many years.
However, we don’t believe these arguments against a small temporary levy are convincing. The public sector is already being cut and further cutbacks won’t help the jobs situation. A tax rise may go against National Party ideology but it is only temporary for a national emergency situation. And the size of the damage bill appears to be greater than current reserves and re-insurance.
With this small temporary earthquake levy we don’t wish to politicise the argument. We don’t wish to re-litigate the argument around National’s tax changes, nor do we think the Right should use the opportunity to promote their agenda of asset sales to pay for the damage. We need a pragmatic response to the situation we’re in. We can return to the arguments about tax rates and privatisation later.
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