Four election candidates explain their party's approach to income tax, what they like and what they would change

Each week from now until the election we will be asking a small group of electorate candidates to explain where they and their parties stand on a specific issue.

This allows them the opportunity to explain and justify their policies, which we have separately listed and compared here.

This week the subject is Income Tax. (Responses are listed in Party alpha order.)

David Seymour, ACT Party candidate for Epsom

ACT's policy on income tax is to drop the top rate of income tax to 24 per cent with an aim of reducing the top rate to 17.5 per cent by 2020.  Full details on how this would be achieved can be found in our comprehensive alternative budget here: http://www.act.org.nz/files/AlternativeACTBudget_v3.pdf

This would be achieved by spending reductions, leaving room to reduce government debt.  The spending reductions would primarily be reductions in middle class welfare, including reducing Working for Families payments for higher income groups (who would pay lower taxes) removing Kiwisaver incentives, and cutting wasteful budgets across the board (as detailed in the appendices of the alternative budget).

Economically, we anticipate that the reduction in deadweight losses resulting from lower taxes would boost growth from 3 per cent to 5 per cent per annum, significantly increasing New Zealand's overall wealth over time.  However there is also a moral dimension to this policy.  New Zealanders should pay tax for the services they receive.  We are comfortable with higher earnings resulting in larger tax bills I proportion to income.  Nonetheless, applying ever higher tax rates on top of the base rate as incomes increase amounts to tall poppy syndrome in the tax code.  ACT's policy of lower flatter tax rates sends the opposite message, that we wish to celebrate rather than punish success.

Denise Roche. Green Party candidate for Auckland Central

Taxation can be used to direct economic activity, change behaviour and drive innovation and this is why the Greens in government will introduce a Capital Gains Tax on housing that excludes the family home and will introduce a charge of $25 per tonne for carbon (with agriculture paying $12.50 initially.). The carbon charge will be recycled so that every taxpayer receives a $2000 tax cut and company tax is reduced by 1 percent.

Greens policy is to also remove tax from the first $10,000 of earnings which will advantage those on the lowest incomes the most and we will create a child payment for all low income families by modernising the Working for Families tax credit and increasing the top tax rate. We intend to introduce a 40% tax rate for income over $140,000 which will affect about 3 percent of earners in New Zealand and will bring us more into line with other OECD countries.

Jacinda Adern, Labour Party candidate for Auckland Central

All Kiwis want a well-paid and secure job, the chance to buy their own home and to be able to afford to raise a healthy and happy family. To give every Kiwi those opportunities, we need to grow a strong and fair economy.

Labour will introduce a new progressive top tax rate of 36cents in the dollar on income over $150,000 a year. Currently the top tax bracket is 33 cents for earnings over $70,000. The new tax rate comes into effect in 2015, and will affect just 2% of taxpayers, whose average income is $260,000 a year. This policy will raise around $200 million in its first year, growing in future years.

Labour will also clamp down on tax avoidance by multi-national corporations because we believe that everyone should pay their fair share. We will also raise trustee income tax to 36 per cent to avoid trusts being used as tax avoidance vehicles. With this additional revenue, Labour will invest in housing, education, children and health so that New Zealand is a fairer and more prosperous place to live, while paying off National’s debt.

Labour will provide solid and stable economic management as the cornerstone for positive change for New Zealand.

Nikki Kaye, National Party candidate for Auckland Central

National has delivered stable, responsible government. Our wide-ranging programme is improving the country’s books, building a productive economy, providing better public services, and rebuilding our second largest city.

In 2010 we launched the biggest reform of the tax system in almost 25 years. We reduced taxes on things we want more of - work, savings and business investment - and increased tax on consumption and property speculation.

Our reform package has made the tax system fairer, more sustainable, and a better support for economic growth. And we’ve done it in a fiscally neutral way.

Personal tax cuts are putting more money in the pockets of hard-working Kiwis, while a reduced company tax rate is helping ensure businesses are competitive.

We’ve removed the ability to shelter income in trusts by aligning the trust rate with the top personal tax rate, raised the effective tax rate on property investment, and prevented the use of investment losses to claim Working for Families and other government support.

And we’re ensuring our tax and income support systems benefit low and middle-income families. 70% of Kiwis now pay income tax of 17.5 per cent or less, while the top 15 per cent of households by income pay 74 per cent of net income tax.

We need to keep the Government’s books in surplus and ensure our debt is under control. Our intention is to reduce taxes only when there is room to do so.

Feel free to comment below, but keep all commenting civil and within our commenting guidelines. You can also suggest future issues for debate by candidates.