Wealthy New Zealanders say they want to pay more tax

Wednesday, 10 May 2023

Once all sources of income are taken into account, the wealthiest Kiwis are taxed at a rate of 8.9%, according to a separate report from Inland Revenue released earlier this year. (Video first published April 26, 2023)

Almost 100 wealthy New Zealanders have signed an open letter to the Government to say they want to pay more tax.

Said to be inspired by global initiative Millionaires for Humanity, 96 wealthy individuals have said they recognise the current tax system is unfair, allowing wealthy people to pay less tax, while other New Zealanders who struggle day-to-day pay more.

Those who signed include Sir Ian Taylor, Phillip Mills, of gym chain Les Mills, company director Rob Campbell, actress Robyn Malcolm and Dame Susan Devoy.

The letter says they recognise the benefits of tax; that it “funds everything from the teachers who give our children a great start, to the Department of Conservation rangers who look after our environment, through to healthcare professionals on whom we all rely”, and asks the Government to fix the tax system.

* Richest Kiwis pay about half as much tax on the dollar as the average New Zealander

* Face it, we're going to have to pay more tax

Sir Ian Taylor and others say the country’s tax system is broken and needs an overhaul.

“We write as people who are frustrated with how much tax we pay. We want to pay more,” the letter begins.

“As people leading financially comfortable lives, we might be expected to be anti-tax. But we recognise tax as a shared contribution to our collective success.

“As Cyclone Gabrielle has made horribly clear, the cost of responding to the climate crisis, repairing the public realm and future-proofing our infrastructure will only increase. And that will require a bigger tax contribution from those who can afford it.”

Les Mills executive director Phillips Mills says higher taxes for the wealthy would lift the poorest Kiwis out of poverty.

The letter goes on to state that they are “ready to pay our fair share” and willingly pay more tax “to help lift families out of poverty and ensure everyone thrives – an investment that would pay off many times over”.

According to Infometrics, one in seven children lives in poverty, leading to an economic burden, including in health, of at least $10 billion a year.

“Some of us have built businesses from scratch and celebrate profit when it serves the public good. But we know that in our working lives, we have benefited from the infrastructure paid for by the taxes of past generations: the roads, the hospitals, the schools. We want to pay that forward, to replenish the collective pool of resources from which we have drawn, so that future generations can have the same opportunities,” says the letter.

Les Mills executive director Phillip Mills said the current tax system was “broken”.

“We’ve been focused too much for too long on paying lower and lower taxes. We need to focus more on having a world-class education system and not having people living in poverty and children coming to school not having enough to eat.”

Mills said wealthy people should be paying more than they were. He would be in favour of both a capital gains tax and wealth tax.

“Those who can afford it should be paying significantly more taxes.”

He says it is “bad for the economy to be tax-advantaging asset classes like residential property”.

Ian Taylor says New Zealanders need to think of tax as a “social contract” and be happy to pay it.

Sir Ian Taylor said there was so much talk about tax being a burden and not enough people thought about the benefits it could deliver for better access to healthcare, education and infrastructure.

He said New Zealanders’ attitudes towards tax needed to change - to start thinking about it as a “social contract” of sorts as people did in Nordic and other European countries.

“The only words we put with tax are burden, relief; everything is a negative about tax, but actually I believe it is part of a social contract that we all have to each other.”

Taylor wanted more tax or a capital gains tax if there could be accountability on government spending.

He said the reason Australia had a lower tax, GST rate and generally higher pay for its workforce was because it collected $19 billion from capital gains each year and had more surplus money to spend.

A similar tax here would have positive impacts and help to alleviate the struggles within the country’s healthcare and education systems that were increasingly “coming unstuck”, Taylor said.

Rich New Zealanders should put their hands in their pockets, says David Seymour.

He said the current system hit the poorest the hardest.

“At the moment with tax only on wages and income… those people [at the bottom] are struggling to survive.

“Why do we talk about tax as being a burden? Why can’t we as a little country at the bottom of the world actually talk about that social contract we have … it’s one of the prices we pay to live in a democratic society, and we should be proud to pay it.

“It costs to run a country.”

A recent report from Oxfam Aotearoa found New Zealand’s tax system contributed to the gap between the rich and poor. It found that the tax system was effective at collecting revenue, but this had a direct impact on unequal income distribution.

Tax has been a topic of discussion in recent weeks following the Inland Revenue department’s research which found the wealthiest New Zealanders paid 8.9% tax on their incomes, on average.

A separate released by Treasury found that the country’s wealthiest 1% own more than a quarter of the country’s wealth.

ACT leader David Seymour criticised the open letter.

“It’s always been such a lame humble brag ‘I’m so rich, I want to pay more tax’. You know what, if they want to help other people, they can very happily put their hands in their own pocket right now.

“The fact that they are wealthy doesn’t mean they know more about policies. It does mean that they have got the ability to put the hand in their own pocket and help others should they choose. The fact they are not doing that and trying to make a statement about how rich they are tells you a little bit about them frankly.”