The Revenue Minister says new research revealing the wealthiest Kiwis' effective tax rate is less than half of middle New Zealand is not "about attacking the rich", but will allow for "future discussions on tax policy".
Reports from IRD and Treasury released on Wednesday show the median effective tax rate was just 8.9 percent for the richest 311 families in New Zealand.
When taking away Government paid benefits and adding in GST paid, it was found that a middle-wealth Kiwi has an effective tax rate of 20.2 percent. The comparable median for the wealthiest New Zealanders is just 9.4 percent.
Revenue Parker David Parker said this showed a large difference between the tax rates ordinary New Zealanders pay on their full economic income compared with the wealthiest.
"The difference is mainly because the very wealthy earn only a small portion of their income from wages and salaries, unlike most New Zealanders," he said.
The wealthiest Kiwis receive much of their economic income from capital gains, which are mostly not taxed, bringing down the effective tax rate paid by the rich families.
The research is meant to address a lack of information about what rate of tax the wealthiest New Zealanders are paying.
Parker said that unlike overseas studies that draw on surveys or scenarios, this research uses real data. The Government changed the law last year to enable IRD to require high-wealth individuals to provide their earnings data.
"To be clear, this work is not about chasing tax avoiders, nor is it about attacking the rich," he said.
"Wealthy New Zealanders are usually hard-working and creative people who comply with current rules. They have assisted IRD with this inquiry, and I am grateful for that.
"The excellent work in this survey will enable future discussions on tax policy to be based on solid evidence."
Parker is also pushing ahead with legislation to enshrine into law "tax principles" that officials could then assess the tax system again.
The legislation would set out agreed-upon tax principles and require officials to regularly report on the tax system using those principles as the basis. Political parties could still individually decide how best to apply these with policy.
He said on Wednesday that this Tax Principles Bill would be introduced later this year.
Speaking on AM, Prime Minister Chirs Hipkins said the research released on Wednesday provided "an opportunity for people to see an evidence-base for future tax decision-making". But he said, "we haven't made decisions based on that yet"
"Every political party will have access to that same information and they can formulate their tax policies and set them out before the next election," Hipkins said.
"As I've said, we've been clear that we'll be honouring the commitments that we made at the last election for this term of government and we will set out what our tax policy is before the next election so that New Zealanders are clear on that."
During the 2020 election, the Labour Party promised no new taxes this term other than a new 39 percent tax rate on personal income earned over $180,000.
The IRD research prompted "a series of questions", Hipkins told AM.
"Of course, we've been asking those questions but we're not announcing any significant changes in tax policy in the next little while."
Prior to the research being released, ACT Party leader David Seymour. said he expected the Government to try and leverage the results "into a reason to take more money from Kiwis".
"We tell kids to listen to their teacher, work hard, get good grades so they can get good jobs, save their money and invest wisely. Labour says if you do all that we’ll tax you harder. It is tall poppy syndrome in the tax code," he said.
