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Are the Greens failing to uphold the Treaty?
The Taxpayers’ Union is calling on the Green Party to front up on whether its tech tax proposals are a breach of New Zealand’s treaty on double-taxation with the US.
Taxpayers’ Union spokesman James Ross said:
“Earlier this month, Chlöe Swarbrick said New Zealand needs to be responsible and uphold its international treaties or our trading relationships will be at risk. That was about the Paris Agreement, but does it only apply to treaties her party likes?”
“Despite the Greens’ claims, their ‘tech tax’ isn’t just better enforcement. Inland Revenue already has all the powers it needs to crack down on tech firms avoiding tax, IRD's expert analysts haven't just blanket reclassified offshore sales and service fees as royalties for a reason.”
“The Greens’ proposals can work one of two ways. Either IRD can review each tech firm’s business arrangements individually, as they do now. Only those which are actually dodging tax will see any tax changes, and the policy will be a damp squib with marginal revenue.”
“Or the Greens could legislate to rewrite how tech companies are taxed. Unilaterally deciding to tax sales booked offshore as if they were royalties - like the Greens are planning for Netflix and credit card companies - would likely breach our double tax agreement with the US.”
“The US is our second-largest market, with 12 percent of New Zealand’s domestic goods exports heading to America last year. If Swarbrick wants to try to sneak a digital services tax through the backdoor and start a trade war, the least she could do is let Kiwis know.”
The Wealth Tax Fantasy
The New Zealand Taxpayers’ Union has today released a new briefing paper, The Wealth Tax Fantasy, exposing the economic risks and unrealistic assumptions behind the Green Party’s proposed wealth tax. The paper finds the policy would hit farmers, retirees, and small business owners while raising far less revenue than claimed.
Taxpayers’ Union Policy Analyst, Austin Ellingham-Banks, said:
“The Greens are proposing one of the most aggressive wealth taxes in the developed world, but the numbers simply don’t stack up.”
“The idea this only hits the ‘top 3 percent’ is misleading. Retirees, farmers, and small business owners are already over the threshold — and without inflation adjustment, more Kiwis will be dragged in every year.”
“For farmers, the tax bill can exceed what the farm actually earns. For small businesses, it means paying tax on assets, not income, forcing owners to cut back investment or sell up.”
“And it’s double taxation. Income that’s already been taxed gets taxed again, year after year, just for being saved or invested.”
“Overseas experience is clear: wealth taxes drive investment offshore and raise less than promised. Treasury has already warned the Greens’ approach would be economically costly.”
“This policy is light on evidence, heavy on wishful thinking, and ultimately just another tax on aspiration.”
Read more
NEW REPORT: Green with Envy: Wealth, Death, and Trust Taxes Examined
The New Zealand Taxpayers' Union has today released a new report, Green with Envy: Wealth, Death, and Trust Taxes Examined, exposing the real-world impact of the Green Party's proposed $17 billion tax grab. The report finds the policies would hit far more than the super-wealthy, catching homeowners, farmers, retirees, and small business owners across the country.
Taxpayers’ Union Policy Analyst, Austin Ellingham-Banks, said:
"The Greens are proposing one of the most aggressive tax regimes of its kind anywhere in the developed world, resulting in a broad-based raid on Kiwis who’ve worked hard, saved, and built something over a lifetime."
"The idea this only hits the wealthy simply doesn't stack up. One in five Kiwi homes is held in a trust, and the Greens would tax those assets from the first dollar. In Auckland, that means an annual bill of over $18,000 on a mortgage-free family home, or $3,600 for first home buyers with a 20 percent deposit."
"And it doesn't stop there. A 33 percent death tax would force many families to sell farms, homes, or businesses just to pay the bill. Inheriting the average dairy farm would trigger a $1.2 million tax bill. There is nothing fair about taxing grief, or taxing the same income again when it's earned, saved, and finally passed on."
"Most countries that have tried wealth taxes have scrapped them because they drive investment and talent offshore. Death taxes are even worse, New Zealand tried one and abandoned it in 1993 because it crushed farming families and raised almost nothing."
“This package is light on evidence, heavy on populism, and green with envy.”
Green Party’s Fiscal Fantasy Would Bankrupt New Zealand
The Taxpayers’ Union is slamming the Green Party’s so-called “Fiscal Strategy 2025” as reckless and would saddle New Zealanders with crippling debt, soaring taxes, and zero accountability.
Taxpayers’ Union spokesman James Ross says:
“This isn’t a fiscal strategy, it’s an economic suicide note. The Greens are proposing to throw out decades of responsible financial management in favour of fantasy experiments based on unlimited borrowing and spending.’”
"The Greens propose blowing out debt to 90% of GDP - more than double current limits and gutting the Public Finance Act and the fiscal responsibility rules that protected New Zealand during crises."
"Under the Green Party's plan, there's no limit to how much taxpayers would be expected to cough up."
"Kiwi households live within their means. The idea that Government can ignore debt and call every spending spree an ‘investment’ is delusional."
“This is North Korean economics wrapped in greenwashing. We don’t need more bureaucracy, we need restraint and respect for taxpayers’ money.”
"Government and opposition parties must reject the Greens’ proposal outright and reaffirm their commitment to prudent fiscal management and debt discipline."
Death and Wealth Taxes Back on the Table — Hipkins Must Rule Them Out
Responding to Winston Peters ruling out working with Chris Hipkins after the 2026 election, Taxpayers’ Union Spokesperson Tory Relf said:
“A potential Labour Government would now almost certainly need to rely on parties demanding wealth and death taxes. That would cripple family farms and small businesses.”
“Kiwis need economic growth, not another $44,000-per-household in taxes. If Chris Hipkins wants to be taken seriously on the economy, he must rule out these punishing taxes - no ifs, no buts.”
Expert costing of Green Party wage policy
The Taxpayers’ Union is today releasing independent research from former NZIER Principal Economist, Dr Michael Dunn, which raises significant questions about the Green Party’s election costings.
Dr Dunn’s analysis of the Green Party’s “Fairer Reward for Fair Effort” policy document shows that the Party’s taxation forecasts are incorrect and instead of generating tax revenue, will actually result in a net loss in revenue.
The Greens say that their policy will mean increased revenue to the Government of $800 million per year, our independent expert says the actual cost to the Government is at least $110 million. That is a massive difference of more than $900 million in the one policy and suggests the Greens' costings are fundamentally flawed.
On top of the drop in tax revenue, Dr Dunn estimates that the policy would increase government expenditure on employee wages and contracts for services by around $1.1 billion over 3 years.
The Taxpayers’ Union repeats our offer to allow our independent expert to confidentially cost any political parties' policy before they are released so that the public can have confidence in how much a policy will cost or benefit taxpayers.
The report's author, Dr Michael Dunn, has told media:
The Greens' costing completely ignores the reduced taxes from companies due to the higher wages. They appear to assume that businesses can magically generate more money to fund higher wage bills. It doesn’t happen like this in the real world.
Expected slower employment growth will also adversely affect tax revenue.
Under this policy the Governments' primary fiscal balance would be reduced, by at least the direct costs already acknowledged by the Green Party, as the incremental tax revenue yield would be minimal, if any. In addition social transfer payments linked to wage rates would be increased.
This isn’t some Taxpayers’ Union hack calling into question the Greens' costings. Dr Dunn led the team at IRD that costed revenue policy and produced budget revenue forecasts for 12 years. He has advised both National and Labour led administrations. We've engaged him to review numerous party costings and provide the information for our Bribe-O-Meter.
UPDATE: Our expert, Dr.Dunn, wishes to thank a reader who pointed out that the proposed October 2014 increase in the minimum wage would be only 75 cents per hour, and that would have a reduced cost and impact. He has recalculated his figures accordingly, but the conclusions are unchanged. The updated report is available for download here.
Taxpayers Union on Greens Economic Policy: 3 News
Greens announce $1B economic policy 3 News - 16/07/2014
Meanwhile, the Taxpayers' Union says the Greens' policy is the "lesser of two evils" and is taking a cautiously optimistic approach.
"Although the Greens' policy still leaves room for picking winners, on balance it is better than the existing corporate welfare scheme operated by Science and Innovation Minister Steven Joyce," executive director Jordan Williams says.
The union is concerned tax credits could be vulnerable to businesses manipulating what they do to qualify for new research and development funding.
Click here to read the full report.
Stick to the cake stalls
This morning the NZ Herald reported that the Green Party want taxpayers to foot even more of the bill for political parties:
“The Green Party believes the rules could be amended further. It wants an inquiry to investigate state funding for election campaigns.
A spokeswoman said: "We see partial public funding of parties as a further step to help level the playing field between parties and to help combat parties being captured by wealthy interests."
The party said it was important that the level of public funding was not set so high that the parties did not need to go to the community for more money.
The Greens were heavily dependent on their 14 MPs, who donated nearly $250,000.”
In a democracy it is up to the public to decide which party, policies and personalities they want representing them in the corridors of power. The popular prosper and the shunned struggle.
Despite all the rhetoric that private money is bad for politics, it is better than public money cementing the status quo. "Equalling the playing field" by giving political parties taxpayer subsidies gives political incumbents a huge advantage. It makes it more difficult for new political movements to get off the ground. It means that the media gain even more influence.
As it currently stands, the taxpaying public already hand over generous subsidies to political parties so they can in turn be force-fed political propaganda in the lead-up to every election. In the 2011 election alone, taxpayers paid up $3.2m for the privilege.
So, should it really be the taxpayers’ role to support dead-beat political parties whose activists struggle to solicit donations for unpopular policies? Absolutely not.