The announcement by the Government that it will cut $1b to its Budget operating allowance is unnecessary and damaging, according to the Better Taxes for a Better Future Campaign.
“This cut, on top of last year’s mean spirited Budget, is a result of the 2024 tax cuts, which overwhelmingly favoured the wealthiest New Zealanders, including the $2.9b tax break for landlords,” says Glenn Barclay, spokesperson for the Better Taxes Campaign.
“The Government has painted itself into a fiscal corner as a consequence and is making decisions that are both unnecessary and damaging because of their unwillingness to recognise that our tax system is broken and that we need to raise more revenue for the betterment of all New Zealanders.”
“We are seeing the health system in crisis and other essential public services being squeezed,” says Glenn Barclay.
“While this is an immediate problem, it reflects the failure of successive governments to ensure that we collect sufficient revenue to meet our needs and that those who can afford to pay more in tax do so.”
New Zealand’s core Crown revenue has averaged around 30% of GDP historically and this is low compared to many European countries, which have much better health systems and public services.
In 2023, research by Inland Revenue demonstrated that the the wealthiest 310 families in New Zealand had an effective tax rate of around 9% whereas the average New Zealander paid over 20% in tax.
“It is clear that our health system and public services need better funding, that we need more resources for tackling climate change and that inequality is eating away at our society,” says Glenn Barclay.
“Our broken tax system lies at the heart of all these pressing issues and we call on the Government and opposition parties to recognise the need to introduce taxes that many other countries have – such as a capital gains tax, an excess profits tax, wealth taxes and wealth transfer taxes.”
The Better taxes for a Better Future Campaign was launched in June 2023 with the support of 21 partner organisations. It is seeking a tax system that:
- Is fully transparent.
- Ensures people who have more to contribute make that contribution: that we gather more revenue from wealth, gains from wealth, all forms of income, and corporates.
- Makes greater use of fair taxes to promote good health and environmental health.
- Addresses the tax impact on the least well-off in our society.
- Raises more revenue to enable us to address the social, economic and environmental challenges we face.
