Parker has ‘no idea’ of tax rate paid by top 5%

Revenue Minister David Parker will introduce a bill that would set out principles of fairness in the tax system.

Speaking at the Victoria University in Wellington yesterday, Parker said authorities had ‘‘virtually no idea what rate of tax is paid by the very wealthy’’. ‘‘We do know the rate paid by wage and salary earners and by small-business owners.’’

He said New Zealand was a country with inequality.

‘‘More than two-thirds of all financial assets are held by the top 5%,’’ he said.

However, the Labour Government had ‘‘no secret plan’’ to introduce new taxes, such as a capital gains or wealth tax.

The new bill, to be called the Tax Principles Act, was part of Parker’s work over the past few years looking into the wealth levels of the richest New Zealanders and how much tax they pay.

He said the research would inform future tax policy advice and development.

‘‘I believe the tax debate in New Zealand has become mired in unnecessary controversy, and I have some fundamental work under way to address that,’’ Parker said.

‘‘The information collected will be securely held separately from Inland Revenue’s other systems.

‘‘Only officials working on the project will have access to the individualised information, which will be destroyed at the end of the project.

‘‘What it will do is allow any future tax policy development to be based on solid evidence.’’

He was given $5 million over two years in last year’s Budget for the research.

He described GST, a 15% tax added when people buy goods and services, as a regressive tax because it takes a larger percentage of income from low-income earners than from high-income earners. He also used the speech to criticise the National Party, sayings its economic policies wouldn’t help people struggling to make ends meet.

‘‘National is proposing a return to what even the OECD has described is New Zealand tenants subsidising taxes for their landlords. Rather than helping the squeezed middle . . . they are in fact squeezing them harder while cutting taxes for the better off.’’

‘‘I believe the tax debate in New Zealand has become mired in unnecessary controversy, and I have some fundamental work under way to address that.’’

David Parker, pictured left

Revenue Minister