Ardern rules out Labour raising top income tax rate next term, says income tax won’t even be put in front of Tax Working Group

By Alex Tarrant

A new top tax rate under a Labour-led government next term is not on the table, leader Jacinda Ardern says.

Ardern and Labour finance spokesman Grant Robertson were speaking after Treasury released its pre-election fiscal update earlier Wednesday. Finance Minister Steven Joyce used the forecasts to argue Labour would have to raise taxes if it wished to announce any large spending promises.

But Ardern fired back, ruling out changes to the top income tax rate of 33%. “It’s not going to happen,” she told media in Parliament Buildings in Wellington.

“We’ve looked at the books and what’s available and we believe we can deliver on what our policy intentions are with what is available. So we will not be campaigning on a top tax rate. I have no intention on giving that to the Tax Working Group that we’ll be establishing, and it’s not part of our plan.”

She later added that changes to the GST rate would also not be put in front of the Tax Working Group Labour has promised to set up after the election to review a fairer system for taxing assets, wealth, and income.

‘We don’t need the revenue’

Ardern was asked whether the income tax decision was made on a political basis, as well as economic. She replied that she made decision “simply based on the right thing to do, looking at what’s available and looking at what we are heading to this election with a policy programme around, we’re able to do it within what is available today.”

She acknowledged that the potential for a new top tax rate had been a possibility under Labour, and that she was now formally taking it off the table. “I always was leaving room for us to take a look at what the government books would look like before we made that decision,” she said. “We’ve made a decision we can maintain all of our priorities with what’s available.”

“My pledge to voters is that everything we do will be fully costed. There’ll be no question in people’s minds as to how we will fund absolutely every commitment we make. I’m campaigning here on being the Prime Minister in four weeks’ time. I need to demonstrate that absolutely everything we pledge we can pay for, and we can deliver. Anything less would be absolutely unsatisfactory.”

On Labour potentially campaigning on a higher top tax rate: “to be fair, that was what was floated by the media rather than floated by us. We were asked continuously, I reserved the right to go away and make sure that we had the books open before us before we made any decision. But that was simply us reserving the right to look at every option,” she said.

“We are not campaigning on an increase in taxes for personal income and it is not part of our plans.”

“My decision to tell you that, came today. Again, that was something that really was put to me several times – it was never a hard and fast part of our policy programme. I simply came into the role of leadership three weeks ago. I wanted the ability to look at the books, to keep a range of options on the table. Some were never particularly serious, some were, but I’m taking the option today of being absolutely open about where we’re heading.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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113 Comments

How is a Tax Working Group supposed to function appropriately given these types of constraints? What would their goal be?

Capital Gains Tax.

So what will be discussed by the tax working group ?

Clearly CGT is in , and so is a reversal of tax cuts for people like my daughter who is employed and poorly paid in Education .

Water tax is in , which could be a nightmare to collect considering it mostly falls from the sky , and putting a meter on every borehole and pump in New Zealand will create a who new industry .

Skills training levy for every sole trader with a ute and a dog who is not training an apprentice , thats in .

Councils already issue and administer water permits so a water levy/charge/tax would merely add a water cost component onto those permits.

Yes, already metered for volumetric (consent condition) purposes.

Agreed, so adding a charge for water used would be a fairly simple process, administratively speaking (in response to the OP's concern' about how a new levy/tax could be administered).

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I would imagine they will be looking at broadening the tax base away from income tax, which is exactly what they should be doing. Only taxing 9-5 workers is getting a bit outdated.

How about making the inflation portion of interest paid not tax deductible and the inflation portion of interest received tax free to help balance out the effect of inflation on both? It would discourage the encourage the tendency to borrow for property speculation and let inflation pay off the mortgage and encourage saving.

Definitely, the inflationary part of interest payments shouldn't be tax deductible. Yet another way property investors get favourable tax treatment.

Fertilizer should be taxed, not water. Much easier to tax it at ravensdown than meter every well.

Money does NOT grow on trees ... That we know !!
To spend large , you have to earn large -- we surely know that too.
Unless they will start having a hair cut taking the scissors to the ambitious rail projects and push it towards the second term !!
Something has to give way !!

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Yes - National

Actually, money does grow on trees! Ask anyone who's seen the 'value' of their house go up. The next sucker will have to pay for it of course, but the money that they will need.....comes from Magic Trees. ( It's called Debt, in layman's terms. Private and Public, and there is an endless supply of it.....apparently)

The rail projects are largely funded by axeing nationals low value reading projects (12 billion promised by national)

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It seems Jacinda is a one -hit wonder , who is making up policy on the fly .

Pity her team is so weak , and without depth .

Boatman, you are all over the place today. So if Winston won't go with National you will go fishing and leave others to save NZ from Labour?

Actually Boatman has my sympathy, it just gets messier & messier. We have too many MP's, too many parties, all just like horses neighing on a merry go round. Gone fishin, instead of just awishing. Nevermind, you never know, might do a Maui and pull up another Island.

we also have a short election term, changing it to 5 years can help steep policy in the right direction rather than policy driven to retain their seat at the table.

Agreed foxglove and sammnz. Less MP's in parliament... 1999 citizens intiated referendum, 84.8% voter turnout (!!!), 81.5% vote to reduce 120 MP's to 99. Voted down in parliament by MP's (shock, horror)

We need binding referenda as the people usually get it right.

Regarding a 5 year term, 69% of kiwis voted for it to remain 3, so gotta go with democracy on that one (though I would prefer longer, so a governments poor decisions come back to bite them, rather than always blaming another party...)

David Lange said that was by far the most cynical and self serving event he ever witnessed. What those MP's decided (and doubt today's lot are any better if not worse) was we do not want MMP, so if Joe Public consider us to be a low calibre and greedy grabbing lot, then they are hardly likely to vote for a system that will burden them with even more of the same ilk.

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All I can say is with National 130,000 ish people came into NZ last year. Some are working, some will become residents. Now to get it down to 70,000 we exclude NZers who are leaving.

I dont want those NZers to leave, I want them to stay, we are replacing NZers with other people. So to me its not 70,000 entering its over 100,000 entering. Its not necessarily the numbers entering, its the change in culture and whether these new immigrants become NZers and integrate.

Plus we have house prices beyond the reach of average people in Auckland.

Homelessness and Traffic is another bug bear. When I first went to ATI and uni about 20 years ago from Waiuku, I would drive up to Auckland. There were no homeless people and it would be about a 50 minute drive easily. Now the drive is over 1hour and 30 mins and there are large number of drunk homeless on the street.

National have had 9 years and all they have done is made NZ worse.

If you want more homelessness, house prices to go up to 20 DTI ratio's, a low wage economy, education rorts, no training for young as they are druggies (English's word), immigration for skill shortages for restaurant workers, fruit pickers and gas attendents. Plus immigration that will fill CHCH every 5 years then National is your party.

Spend considerable time contracting in the inner city 40 to 20 years ago and can promise you that drunken homeless people were everywhere even then. Just because you did not see them does not mean they were not there. Especially around the K Road and Myers Park areas.

Problem with Auckland is that everything is measured as time to travel to the CBD when the vast majority of Aucklanders rarely need to, or in fact want to, go there. Decentralisation of the CBD working precinct (as opposed to high rise apartment living) has been happening for a while and will continue.

Travel time from the Waiuku area to the CBD (or to any points north or west would be much shorter and efficient if the paper roads and bridge joining Karaka and Weymouth had been built as designed back in the 1930's. It is still on track in about 30 years time (only 100 years late) . https://www.greaterauckland.org.nz/2013/04/26/an-update-on-the-karaka-we...

Australia, France, Germany and the UK appear to all have a 45% band. Why not New Zealand? In fact quite a few countries also have a 0% band for low income workers. Just goes to show Labour are moving right to chase votes. Diffocult to see why when they have the opportunity to chase genuine tax reform and modernisation.

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@Squishy ......... Why ?

Because Government does not need the money to run .

We need small Government , minimal interference , low taxes , and we need to not do for people what they could or should be doing for themselves .

The Government does need money to run, the discussion is about where it should come from. Perhaps a higher top tax rate could be combined with a tax free threshold and be revenue neutral, is that still a problem as far as you're concerned?

"small Government , minimal interference , low taxes , and we need to not do for people what they could or should be doing for themselves"

You are describing the USA there - abysmal failure - unless you are wealthy, then its sweet as.

You mean Singapore. The USA has way to many socialist policies, admittedly not as many as Greece or Venezuela, but you get the idea (more socialist = poorer overall). Singapore is a prime example of a fishing village that adopted capitalism and became an international powerhouse within 50 years despite having no natural resources.

Singapore has a far more progressive income tax system than NZ in many ways (another country with a 0% starting rate) and collects a much higher proportion of tax revenue from corporate entities, property taxes etc. as opposed to income tax and GST. If that's your view of a fairer tax burden then I'm inclined to agree.

Exactly! By offering companies such as visa effective tax rates of less than 5% they manage to attract huge amounts of corporate money to their lovely city! We need lower tax rates so that we get more overall tax!

Singapore is a prime example of a fishing village that adopted capitalism and became an international powerhouse

British rule for a century prior to independence. Significant port facilities and regional trading centre. Authoritarian rule and limited democracy. Militaristic with one in every four dollars of Government spending going on the military.

Don't forget the highly lucrative opium trade and piracy, much like Hong Kong.

Small geography also removes a massive amount of cost. E.g. roading, hospitals, electric grid, sewer, water - all VASTLY smaller.

They have no fresh water, ie. they have to desalinise everything ( Desalinisation is one of the most expensive ways to get fresh water, our rivers are a much cheaper source of water ). Our electricity grid pays dividend every year which means they are turning a profit as opposed to being a cost to the tax payer? I'm fairly sure that for every inpatient hospital we have they have one that is larger (they have 20-25% more people than us), we only put hospitals in the main centres anyway.

You mean the Singapore that has a compulsory retirement fund, comprehensive social housing provision, public health insurance, not to mention the fact that it is largely due to government intervention that led to the transformation of Singapore's economy into the powerhouse that you hail it to be.

Compulsory retirement fund = make KiwiSaver mandatory instead of optional (In NZ we have too much choice which is bad for us).
Comprehensive social housing = drop the minimum wage entirely + build huge multi story HDB flats in large clusters on the cheapest land available within the country.
Medisave is like KiwiSaver but it can only be used for healthcare, once you use up what you have saved you pay private hospital rates. (Makes sense how they spend half as much per person to provide world leading healthcare). Government intervention by raising education standards ( letting the failures know that they were failing ), cleaning up crime with capital punishment & attracting foreign investment with low taxes.

I reckon we need a political party that will follow that example!

"Savings" compulsory or not wont achieve anything
To quote Tim Morgan "ALL monetary policy is now geared solely to the management of existing debt".
Which means we have and are plundering the future to prevent a crash... ie rates are being manipulated to make debt burdens manageable and encourage more borrowing ... saving is pointless and worthless under this system. The debt burden is so large and intertwined that the train only goes one way now.
It would be as useful as making saving old lotto tickets compulsory...

Singapore is just a trader/ticket clipper courtesy of geography/history. They are "rich" courtesy of the future promises system we call capitalism. When resource limits really kick in, they are screwed.
"if a nation doesn’t possess sufficient indigenous energy resources to satisfy the aspirations of its inhabitants, then that nation must beg borrow or steal them from somewhere else, or collapse back to a level of natural sustainability."

So you mean everything should be user pays, and we should become like some state in the US. eg Tolls on many roads, healthcare only for those that can afford it etc, and a heavy reliance on charities to mop up society at the bottom. NZs culture is about looking after one another. Userpays is only about looking after ones self. If done right we shouldn't have any need for charities. I don't believe in charity, I believe in everyone paying a far share of tax.

You obviously haven't lived in NZ for the last 40-50yrs. NZ culture might have been about looking after one another a long time ago but it hasn't been that way for the last 30-40yrs. We are way more socialist than capitalist - the govt is over 35% of GDP, you can get more on welfare than most blue collar workers do, and so it goes on. Socialism breeds a selfish culture and an "every man for himself" attitude in society. I see way more evidence of this today than say 40-50yrs ago. Govt has increased exponentially in size and spending on welfare has gone through the roof. Of course, it is never enough and perhaps more of the same poison will eventually work one day...yeah, right. If all of our socialist parties here had any genuine concern for the lower income earners then they would make the tax rate for people earning under $50k tax free. I wonder why they don't do that if they care so much about them...they would lose control and they all know better than us.

Over 50% of our welfare spending is the Pension.

Aside from that, it seems like we may have replaced government / SOE jobs in some cases with welfare instead. Agree with you that it would be good to raise the tax free income threshold - perhaps rebalancing tax onto some of the currently tax-free ways of increasing one's incoming wealth.

Do you have any data handy re what you're describing around welfare and government spending etc?

Boatman...we can't have both the pension and small government. Over 50% of our welfare budget goes to old folks regardless of need.

Unless you're going to opt out of the pension voluntarily I simply don't accept that you really want small government.

It appears that the pension has proven that universal benefit systems are very effective and fair. We should actually be looking at broadening that. Would require us to grow our government revenue though which means bigger government, not smaller.

Those countries tend to have their top tax band kick in around the NZD 500,000 (approx mark). Did you see the outcry over us trying to raise the second lowest (17.5%) band to cover the median wage?

Under the German system your marginal tax rate at NZD 105,000 would be about 15% as opposed to our 33% + acc

http://www.cfe-eutax.org/taxation/personal-income-tax/germany

Bingo

True, New Zealand collects a lot of its revenue through income. For example Germany, as you used in your example above, collects 26% of tax revenue from "Taxes on personal income, profits and gains" but in New Zealand that figure is 39% of all tax revenue. Source: OECD, 2016.

That's partly because we give other forms of wealth gain a free ride.

LIES!!!!!! did you even read the link you posted? TAX RATE IS 42% from 80K NZD!!!! As it should be.

My bad, I assumed 2 NZD per EURO. Upon closer examination the 42% tax rate starts at EUR 52200 (base) + 4500 (travel allowance) + 800 (earning allowance) + 500 (profit allowance) = approx NZD 96,000. For a young couple with only 1 income earner the tax rate is 15% or less up to approx NZD192,000 (allow 10% for exchange rate variance and round it off to 200,000?). They make up for it with a 19% VAT (equivilant to our GST).

Squishy if i were taxed at 45% and then 15% for gst thats %60 tax.That'd be insane!!!I'm already paying my fair share!!!

Erm, no, Narrabeen. Some arithmetrix:

Paid before tax = 100
Tax at 45% = 45
Left in pocket = 55
Spend all 55 on GST-attracting stuff at 15% - GST is 3/23 of 55 = 7.17
Total tax is 45 + 7.17 = 52.17
Effective tax rate on that pre-tax 100 is 52.17%, not 60%....

Facts - awkward things.

And that would only apply to the income over the band.

It is amazing how many people, even though who are supposedly smart enough to be earning big money, don't realise that you are only taxed the higher amount on just that amount over teh band, not on the full amount. That is why income tax bands are a fair way to do it. Ideally we shouldn't tax anything on at least the first 10k.

Well yes, most countries do it [0% starting threshold] to encourage people into employment and reduce social welfare for those in employment.

if he were self employed, earn $115, pay 45+7.17+15 =58.4% marginal tax rate;+ ACC levy , so NB wins if self employed as he got closer

Cheers Kiwichas!!!!Always fun getting the acc bill.

.

45% tax band does not mean you are taxed at 45% for every penny. Also most people will not pay GST on all personal expenditure so that's also a red herring.

Don't forget other taxes such as rates, petrol tax, alcohol tax, tobacco tax, etc.

because Squishy people will rearrange and avoid the top tax bracket. it may very well result in minimal additional tax revenue.

Also introducing a CGT at the top of the cycle may not be the windfall that everyone expects. it may actually create a liability for the State and a tax benefit for those investors that came in late - and experience capital losses.

Good call. Well actually... great call.

Agreed Kate. This young leader is starting to look quite savvy in terms of getting the vibes and making a good call. Who knows, perhaps, maybe all this anti tax noise on this web site by certain contributors has helped raise a flag?

Great call??
Ardern was asked whether the income tax decision was made on a political basis, as well as economic.
Having ruthlessly undercut the Green vote (what MOU?etc) by declaring war on primary producers she is now going after the Nats by allaying fears of tax increases. Power at any cost. Seems to be working.

Not sure what you mean by 'power at any cost' - were you in support of a new top tax rate (as per Green Party policy)?

She is saying a lot of things that are anathema to her fellow Labour MPs; basically shut up, we'll get into power by any means, whatever it takes.
Then we can start squabbling amongst ourselves.

All Labour additional taxes are now Guaranteed , scrap tax cut plans, and if She is promising that everything will be costed for, then they are going to tax anything that moves !! ... is that transparent enough everyone?

Updated

Great news. Taxing income is an unimaginative solution to a complex problem. There have to be better, and more equitable, ways to raise government income. I welcome anyone who even appears to be open to the possibilities.

How may I ask?

FTT

Good heavens, reincarnation, Wilfred, Vernon, Bruce now is your time to shine!

I'm glad to see you have the intelligence to acknowledge that

The first mentioned was a long and dear friend of my father. So as a young one you naturally take on board what surrounds you, tuck it away in the data bank, and as you, I think would understand, reach a point where you just reflect, most times that is quite enough.

A good start would be to go to the other end of the stick and curtail flagrant government wastage. Ministry of Health $35 mill blow out on headquarters. MBIE or whatever they are must be close to $50 mill on statues and office decor. Of course that Minister thinks nothing of spending $1200 on a taxi fare. There it is.

Headline "ARDERN AGREES NOTHING WRONG WITH NATIONAL'S TAX POLICY" Read all about it!

Sounds like a sham group that's just going to rubber stamp a pre-agreed plan.

Exactly. If they're going to the trouble to have a tax working group in the first place then everything should be on the table. From purely income tax through TOP's capital taxes through to no tax at all and everything user pays.

This just highlights yet again how hidebound our politicians (of all colours and parties) are. They're all so attached to their ideologies they're completely unwilling to actually consider what a better approach would look like.

Geez you can feel the heat coming from some of the 'investors'. I think they are waking up to the fact that their days could be numbered and they might have to pay a bit of tax on their income like the rest of us.
I'm surprised they are that concerned since they keep telling us labour has no chance.

Yep, speculating tax offset debt farmers are finally starting to wake up. Perhaps they finally realise after months of blind denial that change is actually about to happen. Has been on the cards for some time. Gap between earning and housing must close from the farce National has let it become.

The options are hyper inflation caused by massive wage inflation, or a significant housing correction as the bias on property is terminated. One effect everyone, especially the retired and exporters (who all vote), and one effects the banks and speculators. This fork in the road has been discussed at length for years, including several Pollys saying not to extend ones self on property related debt. If your left standing heavily leveraged when the specuvestor music is radically stopped by the new Government, you have only your own greed and poor risk management to blame.

Hyper inflation screwing the many, or a significant housing correction screwing the debt junkies - pretty easy vote really.

Its going to be very hard to have a housing correction while we have high population growth.

Can't can't understand why they aren't considering higher tax rates for higher income earners, nor allowing the working group to consider them. I am guessing the bulk of their supporters wouldn't be affected anyway by this. It just makes sense to have higher ratres for higher earners, and the fact is that Labour did have higher tax rates prior to National coming in. In fact National reduced income tax rates from the ones Labour had, so do Labour now agree with National?

Probably not wanting to do it in their first term which is fair enough

What's your definition of a high income earner? Over $100k per annum? If we're lucky then the next few govts will classify over $100k as "rich", although the definition of "rich" will probably end up being more like $70k.
Anyway, let's say the govt raises tax rates on everyone earning over $100k (the rich) to a generous "you can still earn an income" 45%. That will generate about $2b in additional tax revenue, assuming 180-200,000 people on $100k+ incomes in NZ. Notwithstanding the disposable income that will take out of the economy and its effect on businesses, etc, an inevitable reversion to long term govt bond/debt interest rates (i.e. >3% higher than now) will wipe that out in the interest payments alone that will be required to service our govt debt. However, we will keep growing govt debt until the productive economy is suffocated under the weight of taxes. If people actually cared about the state of the nation rather than just themselves - as is currently the case - then more people would be asking the question why our govt is driving us towards inevitable bankruptcy and how we should be reducing the size of govt...not increasing it in a linear fashion year after year.

They should probably look at Australias rates as a guide. Bu the fact is that NZers wouldn't need to earn so much, if they hadn't overpaid for their houses. Now people need a huge income to service their loans, so taxing this more creates problems for them, as it is similar to an interest rate rise on their mortgage. Maybe Labour see interest rates going up in the near future, so don't want to cause more stress on peoples wages with a tax rise on top of that. Maybe they will just increase GST.

Not really it's all about catching votes with the best facade. Actually you sound just like Jim Anderton who covered Clark's tax grab in shoving income tax right up again after the Lange government had introduced GST to reduce it.

Jacinda and Winston could both lie their heads off and Bloater would be happy, huh

Don't know why Boatman get so ramped up about everyone except National
Boatman never ever discusses Nats lies about GST and house prices in 2007
Nats never declared their hand about GST and housing intentions in 2008
Nats outright lied about Dunedin Hospital in 2014
Nats outright lied about Northland roads and bridges in 2014
Yet Boater wants to hold everybody to a higher standard than he requires of National

Hey Bloater, Jacinda and Winston could both lie their heads off and you'd be happy, huh

He and Eco are both Boomers, but never really talk about future generations getting shafted with low wages, a massive pile of government debt to pay off, no Super yet paying tax to support the current Boomers in retirement and living in damp, mouldy rentals owned by other Boomers who benefited from affordable housing.

Boomers voting for the right wing party in government; what's new.

I gather you must have the evidence to back up that statement. How do boomers vote?

As for the worn out cliché about Boomers not caring for future generations, given Boomers gave birth to all non Boomers you are effectively saying parents couldn't care less for the future of their offspring. More rubbish.

And please don't forget the boomers built and paid for this countries infrastructure.
When National came to power 9 yrs ago the govt dept was less than 10 billion $.
When you are born or immigrate to NZ the infrastructure of roads and bridges and hydro dams are not the natural landscape, That infrastructure was built and paid for by the boomers and the generation before them. So please don't begrudge the boomers their day in the sun before they kick off, they built this country and were told they would get a pension.

No, the silent generation built most of this countries infrastructure. It stalled under the boomers and is why we now have massive infastructure shortages especially in Auckland. The boomers were too busy soaking up the land value gains that their forebears left on the table and that their children and grandchildren will have to pay for.

Ocelot; we have massive infrastructure shortages in Auckland because we have allowed record high population growth. Yes that has made some boomers very wealthy. It has also created inescapable poverty for a lot of people. Labour was first to start pumping up our immigration and then National carried it on. Winston is the only politician willing to stop this policy.

The Silent Generation were a particularly useless lot. I guess they were unfortunate in being largely parented by the Lost Generation and could never live up to all the drama of the Greatest Generation. It's interesting when you think about it that the immediately previous generation didn't beget the next generation in the most part but possibly had the greater societal influence.

Are ZS DG-Z and tothepoint in some sort of weird ménage à trois

I think that taxation and how it functions is important, but more to the way it interacts and encourages business. Its our productivity thats the problem and taking more tax, just makes the government grow at the cost of the productive sector which ends up with less.
You can hide this by banks creating more money by lending on assets like housing, the new money can then filter through to government but lets not kid ourselves that we have found a magic bullet, that we have solved a funding issue, it's debt and the interest needs to be paid and there no new employment or real growth. It's that lack of growth that will eventually stop government spending in it's tracks.
So the question is how does government become business friendly, how do we encourage investment away from asset speculation and into wealth creative enterprise.
At the same time we get to deal with speculative bubbles in unproductive (housing) or at best poor returning assets like farm land. It's going to be a delicate juggling act, but one of the biggest issues is the size of the government and it inability to spend our taxes well.
It's the innovation and creativity we need to nurture.

I'm with cousins in Scotland, big old house in the boarder country. yesterday the council 'listed building inspector' turned up to OK a window widening, all good, except he was driving a brand new honking great Porsche, so where does the productivity exist that creates that wealth? it's got to be the guys paying the rates and that is all screwed up.

and taking bribes.

Disappointing in my view. I would liked to have seen low income earners taken out of paying income tax on first 15k. Most countries now have some form of Gst and also a high income tax band to help redistribute wealth. Noone has economic stress when they are earning 200k but you do when you are earning 20k. Why not help those guys out a little?

distributing a smaller and smaller pile of real wealth, will create shrinkage.

Very true but not sure of the relevance.

I was thinking onthe reality of wealth distribution, any successful examples for me? Im not being cynical.

I think our stats for child poverty and high suicide rates are a sign that more social care is needed and that can be helped by a little redistribution from the high income earners to low income earners. UK conservative government recognised this in UK and raised the 0 tax threshold a few years back. Nz is behind the curve on helping low income earners.

We only have relative poverty not real poverty in NZ. Being on the dole puts you in the top 20% of the world's income earners. Singapore got their suicide rates down by not having any dole and improving their educational standards. Spending 10 billion a year on healthcare for 5.5 million people also helped some. (Our government spends over 17 billion a year for 4.5 million people).

Having spent a few years working in poverty alleviation in the third world, I can tell you that relative poverty is a real issue, and that in fact it's a key issue in both the Third World and in NZ, and there's a massive amount our poverty has in common with that in the slums I used to work in, in Asia.

I mean....I absolutely used to agree that the poverty here in NZ was nothing much, people just need to make the right decisions and pull themselves up by their bootstraps, etc. etc.

But we do need to be realistic about the fact we face major issues. Yes, we have some systemic welfare dependency (e.g. there are stories coming out of Northland that are absolutely true), and I have friends who narrowly escaped this despite massive social pressure. But we also do have some pretty serious poverty issues, and a massive amount of it seriously does resemble in so many characteristics the poverty I dealt with in Asia.

Sure, there's some percentage of poverty that is about outright famine and starvation, but most of it is about societal disconnect, access to opportunities, effects across generations, and even the learning of basic concepts, access to capital and even understanding that there are alternatives you can steer your life into.

I absolutely agree some of it's about bad choices. But at the same time, I have no illusions that you or I being raised in many of the impoverished situations in NZ would necessarily somehow make better choices without any intervention. You can take a baby out of an impoverished situation and raise it in a stable, high-decile family, and it'll turn out completely different...it's not nature, in the nature vs. nurture equation. I even recall a former analyst at the Treasury noting they can pinpoint a cohort of 6-7 year-olds who they can say with certainty that 80% will end up in prison, but they're powerless to do anything to intervene...because most interventions that would have an effect are socially unpalatable.

But can the tax system be used to effectively redistribute wealth without penalising the private sector ?

Look at Glasgow a city where a huge amount of EU spending has happened with the intention of lifting people out of poverty and has been going on for several decades.

, The Scotsman reveals the true extent of inequality across Scotland, in a devastating study showing the country's wealthiest suburb has a life expectancy of 87.7 years, while a boy born in the poorest area of Glasgow can expect to die at 54.

Read more at: http://www.scotsman.com/news/a-nation-still-divided-by-poverty-and-inequ...

In my personal experience, the bigger difference was actually made by things we're not doing: breaking down social connection and introducing cross-class mentoring, alongside lifeskills, microfinance and the like. The social disconnect was a massive part of the problem, and having the wealthy actually directly participating in uplifting the poor (for example, teaching them how to start and run a business, then mentoring them along the way) made a tremendous difference, and also taught the poor that they have the same innate value as their more wealthy compatriots.

But I don't know how we could achieve that in NZ.

dup

You recommending we go down the route of favelas or cardboard cities, people sh*tting in the gutters and picking through the dump so we can properly claim we have poverty? In places like that, yes our dole would go a very long way, but that is most definitely not the case here. Relativity is relevant. Our major, major problem is, however, drugs, well meth and all its derivatives, that is going to rot this country to the core.

Drugs! Yes a social scourge alright that threatens us all, rich or poor. Recall reading novels, eg Willard Motley, about the drug scene , especially heroin, in USA big cities 50/60's & it is a similar scenario & something of forerunner of what has evolved here, especially the burgeoning usage of those caught in the poverty trap.

Under $50k should be tax free to help the real strugglers, but why would left wing parties (i.e. most of NZ's political parties) do that and lose their voter base. The last thing a socialist wants you to be is independent and standing on your own two feet. You're a slave to the state and they know better than you, so just get used to it.

If employers try hard to influence government to bring in foreign workers to keep wages down. It's also good to get wages and incomes up by restriction at the border. Now what can be wrong with increased iincomes for New Zealanders.

"We'll increase the top tax rate to pay for other stuff". Gee that's not gonna help us win votes... we'll scrap that. What about extra income needed for other stuff ? Oh, she'll all right

Clever politics from Labour.
By taking the tax hike and family home of the table - Adern has nipped Nationals planned attack lines in the bud.
The squealing from National and its remaining supporters can be heard from my place.

Govt just needs a clear road map of what they want to do in say 20 years, then minimize all the nonsense spending and just put in all the capability so that they can achieve the 20 year goals. If it doesnt meet the 20 year goal then the project should be cut then and there. In the past 8 years National has forgotten about the people, they tried to run this as they saw fit but in the process the people have suffered. I just hope that whichever Govt wins this time puts the people in their 20 year plan. There's no use having a multi billion dollar economy when people cant afford to study, start a family or buy a house. If the 20 year plan is so that every person in NZ can study, work, buy a house, start a family then lets put in all the investment now so we can achieve that. We just want to see a plan!!!!

And now, Fran O'Sullivan comes out in favour of CGT based on her praise for Labour as the past champion of our neoliberal reforms!

Labour is the party which has driven fundamental reform in the past. It is better than this.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1191...

You gotta smile.