ACT party
ACT’s goal is to make New Zealand the most attractive place in the world to work and do business. We want opportunity for all New Zealanders and having the best tax system is part of achieving that goal.
Compared with the rest of the developed world New Zealand suffers from low productivity growth. This is a major problem and has a range of impacts from skilled workers leaving the country to New Zealanders missing out on new life-saving pharmaceuticals.
Both major parties have supported progressive taxation for generations. For too long, the tax system has been used for political vote buying and social engineering. ACT says that is wrong.
There is no fairness in five percent of taxpayers paying a third of all income tax. Currently, someone earning $100,000 pays $23,920 in income tax, three times as much as someone earning $50,000. That’s deeply unfair.
The current system has also been ineffective at achieving its goal – greater equality. Ministry of Social Development data shows that the real driver of inequality over the past thirty years has been the cost of housing, but that cannot be fixed through tax policy.
Meanwhile, the tax system sends a bad message to all New Zealanders about effort and reward. If you upskill yourself, work, save, and invest to increase your income, the government will take more of it off you. On the other hand, if you drag your feet, you’ll pay much less tax and even be given money for free. ACT believes that the social engineering in the tax system is one of the reasons that productivity growth is so weak.
In addition, having four different income tax rates, and a company tax rate that is different again leads to enormous complexity as people attempt to declare income in lower tax brackets by holding it over for another tax year when their tax rate is lower, or keeping money in trusts and companies. This activity does not make New Zealanders wealthier. In fact, fighting with the IRD over tax is a distraction from getting wealthier.
ACT will:
Implement a flat rate of income tax, and a company tax rate, of 17.5 per cent paid for by reducing low-value government spending.
Repeal Labour’s industry-wide centralised bargaining legislation – so-called ‘Fair Pay Agreements’ – and support the right of employers and employees to freely negotiate terms that are appropriate for them.