ACT launches Freedom to Earn tax plan
EMBARGOED UNTIL 1:00PM, SUNDAY, 16 JUNE 2019
“A new tax plan will allow people to keep more of the next dollar they earn, promote a culture of aspiration, and create
opportunities for all New Zealanders”, ACT Leader David Seymour says.
“ACT’s goal is to make New Zealand the most attractive place in the world to work and do business and having the best
tax system is part of achieving that goal.
“New Zealand suffers from low productivity growth compared with other countries. This has a range of impacts, from low
wages, to skilled workers leaving the country, and New Zealanders missing out on new life-saving pharmaceuticals.
“Both major parties have supported progressive taxes for decades. The previous National Government even boasted that it
had made the tax system more progressive. For too long, the tax system has been used for political vote-buying and
“ACT says this is wrong. There is no fairness in five per cent of taxpayers paying a third of all income tax. It is
wrong that if a person’s income doubles from $50,000 to $100,000 their tax bill triples.
“The tax system sends a poor message to New Zealanders about effort and reward: If you work, save, and invest to
increase your income, the government will take more of it off you. On the other hand, if you drag your feet, you’ll pay
less tax and be given money for free. This social engineering has been economically damaging.
“In addition, having four different income tax rates, and a company tax rate that is different again, leads to enormous
complexity and to taxpayers attempting to game the system. This does not make us wealthier. In fact, fighting with the
IRD makes us less productive.
“ACT’s Freedom to Earn tax plan will mean there is only one income tax rate – 17.5 per cent. The message will be clear:
You must make a contribution on every dollar, but your money is primarily your own. The government will not take
progressively more of your money as a punishment for success.
“New Zealand now has one of the highest effective company tax rates in the OECD. ACT’s 17.5 per cent business tax rate
would make us a magnet for investment and create opportunity for all New Zealanders. Reducing tax on businesses by $5
billion a year instead of handing out corporate welfare is one of the most powerful things we can do to boost
investment, productivity, and, ultimately, wages.
“We will fund our plan by ending handouts for businesses through the Provincial Growth Fund and for well-off families
through the Fees-Free scheme. We will also gradually raise the retirement age to 67, cap Working for Families to only
two eligible children and abate the scheme faster for higher income earners, end KiwiSaver contributions, and return the
government’s surplus to taxpayers.
“ACT’s Freedom to Earn tax plan would promote a culture of achievement and aspiration. It would make New Zealand a
magnet for investment and raise wages. Having the political courage to promote such a policy is one of the most powerful
things New Zealand could do to secure a prosperous future in the 21st century.”