Remove income tax and tax assets over $10 million

What the Petition Proposes

This petition suggests a radical overhaul of New Zealand’s tax system. It asks Parliament to abolish personal income tax (the tax paid on wages and salaries) and replace it with a 2% annual levy on personal wealth exceeding $10 million. This "wealth tax" would apply to the total value of assets, including homes, land, shares, and private business interests. The goal is to fund public services like healthcare, education, and housing, aiming to reduce poverty and inequality.

Current Situation and Context

New Zealand currently relies heavily on income tax, Goods and Services Tax (GST), and corporate tax to fund government operations. Recent years have seen public debate over the cost of living, housing affordability, and the adequacy of welfare support. While the government has introduced various measures to address housing and mental health, critics argue that the current tax structure disproportionately burdens middle-income workers while allowing significant wealth to accumulate with relatively low effective tax rates. This petition reflects a growing sentiment among some citizens that the tax system should target accumulated wealth rather than earned income.

Arguments in Favour

• Equity: Supporters argue that taxing wealth is fairer than taxing work, as it targets those with the most resources rather than those earning a living wage.
• Revenue for Services: A 2% levy on high-net-worth individuals could generate significant revenue to fund essential public services without raising taxes on ordinary workers.
• Reducing Inequality: By reducing the gap between the wealthy and the rest of the population, proponents believe this system could help end poverty and improve social mobility.

Arguments Against

• Economic Distortion: Economists often warn that wealth taxes can discourage investment and entrepreneurship, potentially slowing economic growth.
• Valuation Difficulties: Accurately valuing private businesses, unique properties, and illiquid assets is complex and costly for the Inland Revenue Department (IRD) to administer.
• Capital Flight: There is a risk that high-net-worth individuals may move their assets or residency overseas to avoid the new levy, reducing the intended revenue.
• Impact on Small Businesses: Including private business valuations in the tax base could penalize small business owners who have built wealth through their own enterprises, potentially making it harder for them to reinvest or expand.

Key Considerations

Any change to the tax system requires legislative approval by the House of Representatives. While the petition highlights concerns about inequality and public funding, the practical implementation of a wealth tax faces significant technical and political hurdles. Voters should consider how such a shift might affect local businesses, housing markets, and the overall stability of New Zealand’s economy.

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