New Zealand's tax system hasn't changed for decades. It's time for a tax reset that genuinely eases the cost-of-living crisis, tackles our long-term fiscal challenges and ends our addiction to ever-higher house prices.
The full policy will be released soon, but the three key parts of the tax reset include:
A Citizen's Income.
A Citizen's Income backs every Kiwi so they can afford the basics to live well and contribute. Most adults will receive a regular payment roughly in line with the current Jobseeker benefit. No paperwork, no bureaucrats – just a financially secure base to build a life on.
The Citizen's income replaces most benefit classes — including superannuation — and includes top-up functions to ensure no-one is left behind financially. It is paired with a significant simplification of the income tax structure and eliminates the 'welfare trap' where people on a benefit pay an effective marginal tax rate of up to 90% for taking on work. For low-income working New Zealanders, it will be one of the most significant tax breaks in New Zealand history. The Citizen's Income is paid for by introducing a Land Value Tax.
A Land Value Tax.
A land value tax (LVT) makes housing affordable by shifting the tax load off working people and onto land. The tax applies to land only (not any buildings on that land) and for 'land rich, cash poor' Kiwis like farmers and retirees, exceptions and deferrals will apply.
An LVT encourages high-density housing and discourages urban sprawl, land-banking or large rental property portfolios, which helps force down house and rent prices. It also retools our economy for innovation and production, instead of rent-seeking and paper profits. This will help drive real economic growth, by redirecting investment away from housing and towards business.
Compulsory, high-contributions Kiwisaver.
Kiwis have really gotten behind Kiwisaver, but most of us need to save more to guarantee a comfortable retirement. Opportunity will make Kiwisaver a fully compulsory scheme, with substantially higher employer and employee contributions, so we can all grow old with dignity. When well designed, stronger Kiwisaver balances can also be a powerful investment tool for infrastructure and innovation.
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