New Zealand PM Jacinda Ardern Starts Election Tour From Hometown Morrinsville
New Zealand Prime Minister Jacinda Ardern has begun her election campaign tour in Morrinsville, her hometown and where her parents still live.
“I’m back staying at home with mom and dad,” said Ardern.
New Zealand’s ruling Labour Party said it will raise income taxes for top earners if it wins next month’s election to help keep a lid on rising debt.
Labour would introduce a new top tax rate of 39% on any income above NZ$180,000 ($119,000), affecting the top 2% of earners, Finance Minister Grant Robertson said in a statement Wednesday in Wellington. The policy would raise an additional NZ$550 million a year.
Our plan strikes a balance as we recover from Covid-19,” Robertson said. It would avoid cuts to social services “and also help keep a lid on debt as we support the economic recovery from a 1-in-100 year shock,” he said.
The proposed tax increase gives the main opposition National Party something to aim at as it seeks to topple popular Prime Minister Jacinda Ardern in the Oct. 17 vote. While tax hikes are a risky policy to take into an election, Ardern is riding high in opinion polls after her successful management of the pandemic and has considerable political capital to spend.
“No country in the world has ever taxed itself out of recession,” said National Party finance spokesman Paul Goldsmith. “This is just the beginning, Labour will eventually widen the net and come after middle income earners.”
Robertson said Labour will not implement any new taxes or make any further increases to income tax in a second term. He said the new top rate compares favorably with Australia, where income over A$180,000 is taxed at 47% once a 2% Medicare levy is added.
The other thresholds in New Zealand’s progressive tax system would remain the same, with income between NZ$70,000 and NZ$180,000 taxed at 33%.
The government has earmarked NZ$62 billion of spending aimed at stimulating growth and creating jobs as the economy recovers from the blow of Covid-19. In its May budget, it projected net debt will surge to a peak of 53.6% of gross domestic product in 2023 from 19% last year.
The new tax rate “is about finding solutions for the times we are in,” Ardern told media today. “We are affecting a small group, less than 2%, but we are at the same time bringing in revenue that will mean we can retain the high quality of health and education services and keep a lid on debt. This is the right thing to do.”
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