A prominent economist has revealed how he would overhaul Aotearoa's tax system if given the chance.
Independent economist Cameron Bagrie joined AM on Tuesday to discuss New Zealand's economic position.
During the interview Bagrie was asked his view on what incoming Prime Minister Chris Hipkins could do to improve Aotearoa's tax system - and he didn't hold back.
Bagrie said one way to help struggling Kiwis would be to completely overhaul the tax system by lowering income tax and increasing GST.
"Certainly there's some scope for getting rid of what we call tax thievery - that's making sure that as your incomes move up, you don't just shift up into a higher tax bracket," Bagrie told AM co-host Melissa Chan-Green.
"But if I was going to design the tax system from an absolute square one, I would probably have higher GST and lower income tax. And some sort of wealth tax thrown into the mix as well.
"Now whether the government of the day is yet bold enough to come out with that sort of platform, I suspect the answer is no. But the new Prime Minister has basically flagged that he's going to have another look at that old chestnut called tax, so we'll see where it goes," Bagrie said.
The way income tax currently works is, each dollar you earn up to $14,000 is taxed at 10.5 percent, and then each dollar you earn between $14,000 and $48,000 is taxed at 17.5 percent. These are known as 'tax brackets'.
The next bracket is $48,000-$70,000, taxed at 30 percent. The next is $70,000-$180,000, taxed at 33 percent. Each dollar earned above $180,000 is taxed at 39 percent - the final bracket introduced by Labour after the 2020 election.
Along with income tax New Zealanders pay tax on goods and services. GST is usually charged at 15 percent and is added to the price of most goods and services supplied in New Zealand.
New Zealand doesn't currently have a wealth tax or a capital gains tax although it was considered by Jacinda Ardern's Government. But after fierce backlash, Ardern said her Party would not introduce a capital gains tax while she was the leader.
But things could change now that Chris Hipkins has moved into the top role. In fact, Hipkins hinted at tax changes when speaking with AM on Monday.
During the interview, Hipkins vowed his Government would focus on the "bread and butter issues" such as the cost of living. He went on to suggest that could include changes to tax saying, "We should always look at how we can make the tax system fairer".
"I think overall there are some New Zealanders who perhaps aren't contributing their fair share [of taxes]," Hipkins told AM co-host Ryan Bridge.
When asked who those Kiwis are, Hipkins avoided the question instead saying it's important hard-working New Zealanders can get ahead.
"You've asked about values so I will start right at the core value, if you work hard you should be able to get ahead. There are people now working really, really hard, some of them might be working multiple jobs and they're not feeling that they can get ahead.
"They are contributing enormously to New Zealand and to our prosperity but they are feeling that they're not able to get ahead. We need a tax system that recognises this, that actually makes sure that those who are really striving, who are putting in the hard yards, actually feel the reward for that," he said.
But Hipkins confirmed his Government would stick to Labour's tax promise for this term - which is no new taxes outside of the new 39 percent tax rate.
