Labour's David Parker has admitted he was "disappointed" in the Prime Minister's decision to kill off a proposed tax switch, saying it was something he personally supported.
Budget 2023 documents released publicly last week revealed the Government secretly worked on a tax switch that included a tax-free threshold of $10,000 and a 1.5 percent tax on net wealth over a $5 million threshold for individuals.
As those documents were released last Wednesday, Chris Hipkins as Labour leader also ruled out implementing a wealth or capital gains tax. He said with the current economic conditions it was "not the time for a big shake-up of our tax system".
Parker, the Revenue Minister who has previously said he had the courage to fix an unfair tax system and commissioned a report into unfairness in the system, said on Tuesday he was "disappointed" by the proposal being torched.
"I am a team member. Everybody knows my position. I obviously was intimately involved in the design of the proposal. My ministry, Inland Revenue, was one of the two ministries that lead and Grant [Robertson] and I did the design work," said Parker.
"I am disappointed in that decision. As is clear from the papers, I supported it. That is life and I am a loyal member of the Labour Party."
He said he had "no current intention" to resign.
"If I did have, I wouldn't tell you first," Parker said.
Asked what his future goals would be in tax reform, he replied: "It would be to implement Labour Party policy."
He then walked off as more questions were being asked.
Hipkins on Tuesday said there was "always room for improvement" in the tax system, but the Government was already making changes. For example, he said, the Government announced in the Budget that it would increase the trust tax rate to 39 percent, in line with the top income tax rate.
"I believe in a progressive tax system, which is what we have. But within a progressive tax system, there is always room for improvement."
Labour is expected to announce its tax policy very soon
Finance Minister Grant Robertson said last week the tax-switch proposal had "merit" but he's a "team player".
"What I would say is it's an idea that clearly I think had some merit. I wouldn't have put so much work into it if I didn't think that it had merit," Robertson said.
"But I also am a team player and I'm also somebody who's very conscious of the economic conditions that we're in."
The proposal, which has now been torched, would have included a $10,000 tax-free threshold and other smaller changes paid for by a 1.5 percent tax on net wealth over $5 million. The tax wouldn't have applied to some personal assets, like the family home, and would have only captured about 46,000 New Zealanders. NH_Caucus_RYAN_180723
A Newshub-Reid Research poll in May revealed 53.1 percent of New Zealanders supported the Government introducing a wealth tax, while 34.7 percent opposed it.
A report released by Inland Revenue earlier this year found the effective tax rate paid by New Zealand's wealthiest families is less than half of that of middle-income Kiwis.
This is because wealthy families "got most of their economic income from increases in the value of businesses, property and financial portfolios they own or control" - that's capital gains - rather than from a salary or other personal taxable income.
The capital gains are mostly not taxed, bringing down the effective tax rate paid by the families.
After being elected Labour leader Hipkins said the Government 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]," he said.
Hipkins has also said there will eventually need to be adjustments to tax thresholds due to wage inflation, just not yet.
