Wealthy New Zealanders Are Overtaxed Says NP Spokesman

by Mary Swire, Tax-News.com, Hong Kong

13 May 2003

New Zealand National Party spokesman on finance, Don Brash, has criticised the government's policies on income tax, which he argues unfairly penalise those on higher incomes.

Brash told a PricewaterhouseCoopers tax conference this week that lower to middle income groups currently pay up to 1,000 times less tax than those on higher salaries.

"Currently, low-income families pay almost no income tax because of things like the Family Tax Credit," he explained, continuing: "A person earning $25,000 a year with a dependent spouse and two children under the age of 13 effectively pays only $27 a year." Illustrating the harsh gradient of this progressive taxation curve, Mr. Brash explained that a similar family with an income of $100,000 would pay 1,000 times more tax.

The National Party spokesman also attacked the government's attitude towards business, which he feels has led to a poor record on investment.

"As it stands, precious little is being done to influence the key drivers of business investment, little is being done to increase the quantity and quality of capital that the labour force works with, and little is being done to boost the real incomes of the future," Brash told the conference.

Another factor identified by the former Reserve Bank governor as a deterrent to investment in New Zealand is the high rate of corporate tax, which the latest KPMG global corporate tax study found to be one of the highest in the Asia Pacific region.

Dr Brash claimed that tax cuts could easily be afforded by the government, given what he considered a very high fiscal surplus.

Recommended