Watchdog no. 171 (May 2026)
Taxation will surely be a key election issue in 2026. I’m a member of the Canterbury Tax Reform Coalition, which is affiliated to Tax Justice Aotearoa https://www.tjanz.org, a national lobby group for tax reform. Tax Justice Aotearoa (TJA) has approximately 20 affiliated groups which are presently engaged in a Better Taxes for a Better Future campaign https://www.bettertaxes.nz Here in Ōtautahi/Canterbury we have developed a Fact Sheet (as below) which we are using to engage in consultation on tax reform with such sectors as unions, political parties, environmental groups, churches and other community organisations. Our reasons for seeking reform of the present tax system are:
We are not generating enough national tax revenue to fund essential infrastructure and provide vital social services.
New Zealanders (according to a recent Talbot Mills Research Poll) support more money being spent on essential social services.
Our current system is unfair and insufficient to meet our needs. As our Fact Sheet below points out an Inland Revenue Department (IRD) report noted that the richest 311 families in NZ pay an effective tax rate of 9.4% compared to 20.2% for other “middle wealth New Zealanders”. Also, many transnational companies largely avoid paying millions in tax on income earned in NZ.
As part of our engagement with the sectors we are targeting, we also want to promote a number of tax reforms. These include:
Increasing the marginal tax rate for high income earners.
Increasing the corporate & trust tax rate.
Taxing transnationals on their gross NZ income.
Introducing a Financial Transactions Tax (FTT) which is easily captured via digital/electronic payment systems. It would apply a modest levy to all electronic payments and receipts made by the banking system. Banks would be responsible for its collection and payment to the Government. Most of the tax would come from institutions that engage in frequent large money transfers, currency conversions and shares/security trading.
Reducing if not replacing GST (goods and services tax) which is a regressive tax, penalising lower income households who spend a higher proportion of their income on essentials in comparison with wealthier households. Suggestions that GST could be increased need to be strongly resisted
A more comprehensive capital gains tax (CGT) than that proposed by the Labour Party which is essentially limited to investment properties. In particular, a CGT should extend to shares, farms and businesses bought and sold within a specified period.
Introducing user charges on polluting industries as part of mitigating against the worst contributors to water and air pollution, biodiversity loss, climate catastrophe and other threats to our well-being and those who come after us. This revenue could then be used to help transition to more sustainable practices, support those most harshly affected, or contribute to better funding essential social services.
As new technologies such as artificial intelligence (A1) and other factors risk reducing employment in various sectors, consideration needs to be given to generating enough national income to develop a basic Universal Basic Income as proposed by Te Utu Tika Hei Oranga i Aotearoa - Basic Income New Zealand.2
In short, as mentioned from the outset, we need a “Fairer Tax System for a Fairer Society”.
We’re not gathering enough revenue: the total tax take is insufficient to fund essential infrastructure and social services into the future, given the pressure of an aging population and climate change
New Zealanders support more public spending: a recent Talbot Mills Research Poll showed 83% of respondents wanted increased spending on public services (only 3% against)3
Our current system is unfair & insufficient to meet our needs - an IRD report shows that the richest 311 families in NZ pay an effective tax rate of 9.4% compared to the 20.2% paid by other “middle wealth New Zealanders”4
Income for the 2025-2026 year is $169.8b and Expenditure is $183.6b. The shortfall is currently met by borrowing5
NZ core Crown debt is estimated at $192b, or equivalent to 43% of the Gross Domestic Product (GDP). Excludes ACC & Super Fund
Treasury estimates that tax revenue will be down $13b for the next four years due to lower than previously forecast economic growth6
Landlords gained $2.9b tax relief
Income tax reduced by $3.7b annually, disproportionately favouring those on higher incomes
Businesses gained $1.7b in tax reduction on capital expenditure (open-ended)
Lack of a capital gains tax, and reduction in the bright-line test from ten years to two years
An increase of only 35c per hour in the minimum wage for an estimated 142,000 workers (this is below inflation)
A $200m subsidy for fossil fuel development
Allowing transnational corporations (TNCs) to largely avoid paying tax on income earned in NZ (estimated tax evasion in billions of dollars)
Philip Morris Ltd granted an extended 50% tax reduction on heated products until a review in 2027
Not implementing a digital services tax for Big Tech, costing an estimated $100m
Cutting $130m from school lunches in 2024
$ 12.4b pay equity claims (over four years)
$2.4b of Govt. contributions to Kiwi Saver (over four years)
Currently $3.9b in public services cuts
The December 2023 mini-Budget claimed $7.4b in savings by repealing 15 programmes including:
Of 23 Organisation for Economic Cooperation and Development (OECD) countries surveyed in recent years, NZ has the fastest growing gap between the rich and the poor
Of all 38 OECD countries, NZ is among a small minority without a comprehensive capital gains tax (or equivalent) which both the OECD & International Monetary Fund (IMF) recommend.
Households on incomes under $46,600pa pay on average 27% more GST in proportion to their income than those earning higher incomes
Treasury estimates that those with wealth worth over $50m pay an average 9% income tax, compared to the average person paying 22%7
NZ has no tax-free income. Australia has the first $A18,200 tax-free, UK has the first £12,570 tax-free
Watchdog 171 -- May 2026
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