The resurgent debate about a wealth tax and generational divide might feel like typical election year territory but demography grounds it in reality, writes Anna Rawhiti-Connell in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.
Wealth tax spotlighted after Ministry of Transport survey
There’s a note that’s been saved to my phone since last August which unhelpfully just says “Tā Mark Solomon, 2050, retirees”. Helpfully, I remember why I saved it. Speaking at the Writers Festival last year, Solomon cited figures from Stats NZ that point to one quarter of the population being over 65 by 2050. Debate about a wealth tax was sparked by a Ministry of Transport (MoT) survey unearthed by the Herald’s Thomas Coughlan this week (paywalled). The story has prompted National’s Nicola Willis to suggest Labour is still eyeing up some sort of wealth tax. All typical election year stuff but if you think about the cost of superannuation and healthcare as our population ages, tax policy debate starts taking on the simple form of how we will pay a future full of retirees— a reality that won’t change, no matter who wins this year’s election.
80% of young people want wealth tax or other forms of charging to pay for public transport
Bernard Hickey looks at the MoT survey results on The Spinoff this morning. It’s worth noting the survey didn’t seek to be representative of the population and sample size is small. The survey asked people to agree or disagree with this statement: “Introduce a wealth tax, to make the ultra-rich pay their fair share & fund public/active transport.” 65% of people agreed. As Hickey notes the survey reveals a stark generational divide with 80% of young people wanting wealth tax, congestion charges and/or pollution pricing to pay for improvements in public transport, walking and cycling, while less than a third of older respondents were keen on a wealth tax.
Treasury lukewarm on wealth tax
Sometimes I wonder if we grip onto wealth tax because it seems like the most overt way to express frustration at what many view as a growing and vastly unfair disparity, especially between generations. Treasury is actually a bit lukewarm on a wealth tax citing “a high level of avoidance and exemptions” and noting that it raises relatively little revenue. That note comes from a 2021 statement that was most concerned with the future and how we deal with the projected gap between expenditure and revenue that will grow significantly as the population ages. Tax expert Terry Baucher covered it in his latest podcast, transcribed here on interest.co.nz.
Work on a plan to enshrine “tax principles” still underway
Treasury listed a range of options that all result in either introducing new taxes, increasing revenue from the existing tax system or broadening the tax base. In typically understated language, Treasury suggests it may not be “feasible or desirable” to address the revenue/expenditure gap caused by an ageing population within our current tax system, saying it may require “a more fundamental review of the structure and integrity of the tax system as a whole.” Last week, revenue minister David Parker confirmed that the government is continuing work on a plan to enshrine “tax principles” into law that officials would then assess the tax system against. Political parties could still individually decide how best to apply these. That’s probably not conducive to the fundamental review Treasury has lightly suggested we may require.
