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Robertson won't rule out top tax rate hike

Labour number three Grant Robertson has refused to rule out a top tax rate hike.

In repeated questioning during a debate with Russell Norman on TV3's The Nation, the economic development spokeman left his party wriggle room to back the Greens' plan for a new tax rate of 40% for those earning above $140,000. (see transcript below).

The current top tax rate is 33%, which kicks in for those earning more than $70,000.

The Greens say the increase would put another $1 billion in Crown coffers, which would be used to combat child poverty.

Commentators including the NZ Initiative's Bryce Wilkinson say top tax hikes and other "envy taxes" taxes hurt the poor.

Separately, Labour this afternoon pledged to scrap the current secondary tax regime for workers with more than one job.

Currently, those with more than one job often pay a higher rate on their secondary income but make it up if they claim a refund on the wash-up at the end of the financial year.

Labour says this is too complex, overpayments are often not claimed back and the system hits hardest those in casual work.

The party says it would wipe the current secondary tax regime within five years. 

National called Labour's new plan "desperate trickery". The party says there are already reforms "well underway" to deal with the issue.

RAW DATA: TV3/The Nation transcript: Patrick Gower interviews Grant Robertson and Russel Norman

Patrick Gower: Now, we’ve asked Judith Collins repeatedly to come on The Nation this week and sent the documents in full to her late yesterday. She’s declined our request for an interview, but along with her reply has sent us this email dated February the 5th 2013, showing her office prepared a reply on correspondence about the Binnie and Fisher reports a week before she released similar information to Cameron Slater. We’ve shown the documents to Green Party co-leader Russel Norman, welcome back, and Labour MP Grant Robertson joins us from Wellington. Good morning, Grant Robertson. Well, here we have it, guys, an email response – an OIA response in 37 minutes. Grant Robertson, what do you make of that?

Grant Robertson: Well, that’s pretty much unheard of, Patrick. It’s a good time for a pizza delivery –37 minutes – but you’d never expect that from an OIA. I’ve been at both ends of this process, both looking OIAs going out and requesting them. This looks like favourable treatment for someone, and it fits into a pattern of behaviour that we’ve seen from Judith Collins with relation to Cameron Slater. Friday night having a request processed, it just doesn’t happen.

But at the same time, his request did coincide with other requests. I mean, surely, perhaps it was just a coincidence?

Robertson: I think there’s been one too many coincidences here. What this looks like is that Cameron Slater knows what to ask for, and that’s the same situation with the SIS, Jason Ede and John Key’s office, that there are clearly conversations going on in the background, and this is the problem here. We’ve got from John Key down through Judith Collins and now we hear hundreds of comments from ministerial staff on Cameron Slater’s blog. It’s all part of the modus operandi of this John Key government to be able to feed material to a blogger who then incites hate. That’s what this government has become.

Russel Norman, I want to bring you in here. I mean, what do you make of this super-fast email service to Cameron Slater?

Russel Norman: I mean, I agree with what Grant said, and I think what it shows is a system. So, you know, the National Party over the course of its government has established a system where you have the kind of friendly face of the government over here, and then behind the scenes they’re working directly with Slater. And so he’s the dark operations and does all the really nasty attack stuff, but he’s doing it hand in glove with John Key, Judith Collins and all the rest of them. It’s the system that they established that keeps them looking nice and clean and friendly while at the same running these attack campaigns against anyone who gets in their way.

There’s no evidence of that, though, because he’s done everything within the law. We know that the OIA is tightly governed. I mean, how do you know that, that he just hasn’t looked at what’s happening in the media and said, ‘Hey, I’m going to put in something on this’?

Norman: This is a part of a broader pattern.  I mean, there’s masses of material that’s come out now that shows the close working relationship between the government and some of its leading figures and some of its staff, like Ede, but also Collins and Key, they were working very closely with Whaleoil throughout this whole period. I mean, you know, it’s a logical thing to do, I guess, for them. It means that they look like they’ve got clean hands over here, but at the same time they’re working with Slater on all the dirty stuff, and Ede’s obviously another conduit as well. You know, it’s a pretty straightforward approach, in the sense that it makes sense, but it’s not really how I think New Zealanders want their government to operate.

Sure. Grant Robertson, looking this week at the revelations about the SIS OIA to Cameron Slater about Phil Goff, what did you make of the Prime Minister’s explanation that when he himself, actually, as we saw in the YouTube video this week of his post-Cabinet press conference when he said ‘me’, he actually meant ‘my office’?

Robertson: Yeah, it’s very hard to believe. I mean, we’ve now got him saying that; we’ve got reference from Warren Tucker to discussions with the Prime Minister. I think it’s quite clear that the Prime Minister did know about this. But, again, I come back to the fact that in this situation, Cameron Slater knew what to ask for, and the reason he knew was because a person with the job title Senior Adviser to John Key was working with him – that’s Jason Ede. This goes right back to John Key. And if he’s condoning this kind of politics, then the rest of the ministers and the staff in the government will follow on. And I agree with Russel on this – this is the kind of politics New Zealanders hate, and it’s been driven right from John Key’s office.

Now, I want to turn now to economic policy, and Labour and the Greens obviously hoping to put a government together very shortly. I want to look at your tax policy. Now, listen, Labour, you want 36 cents in the dollar over $150,000. The Greens, you want 40 cents in the dollar on over $140,000. This is the tax rate, the top tax rate, and you can’t agree. You’ve got a month to go. Who wins? Grant Robertson, would you be prepared to put yours up?

Robertson: Look, we’re going out with what we think is the best package. We want to make sure that we pay debt, that we go into surplus—

But would you be prepared to—?

Robertson: And that we tax people at an appropriate rate.  And it’s important that we go out with what is our message, and the voters will judge us on whether we’ve got the package to reduce child poverty and also pay down debt and be in surplus.

Yeah, I think everybody understands that, but would you be prepared to raise the top tax rate in negotiations with the Greens?

Robertson: Well, I’m not going to do the negotiations on The Nation this morning. The reality of MMP is that there are always negotiations between different parties.

Don’t the voters have the right to know—?

Robertson: That’s what happens.

Don’t the voters have the right to know, Grant Robertson, if your top tax rate is moveable to even higher as soon as you get into those negotiating rooms? Because this is the first thing you’re going to have to talk about. This is how you pay for everything. So don’t the voters have a right to know? Can you shift it up, or is it rock solid at where you’ve got it?

Robertson: We’ve put out what we believe is the right policy, and we will sit down after the election and work with whoever the voters of New Zealand put up.

Great, so you’re saying—?

Robertson: We think this is the right balance.

We’ll take that as you’re prepared to put the tax rate up. Now, turning to you, Russel Norman—

Robertson: I don’t think I said that.

Norman: Not to put words in Grant’s mouth, but, yeah, go on.

You know, in terms of you, Russel Norman, I mean, Labour wants to stick to the 1.5 billion spending cap. David Parker, the finance spokesperson, said that. Are you prepared to stick inside that 1.5 billion spending cap as well if you go into a government with Labour? And you—

Norman: Well, I’d say—

So thinking hard, are you?

Norman: No, we put our fiscals, right, and we got them independently audited by Infometrics, and so what they show is that the Greens are running larger surpluses than the National Party, right – $2.2 billion.

Are you prepared to stick within the $1.5 billion spending cap that David Parker has said? Because he has effectively said, ‘You play by our rules or you don’t play at all’.

Norman: And so what each party needs to do is go to the election on their platform, so we’ve put out our fiscals very clear – you can look at all of them. We’ve got them audited by Infometrics. You can check them out, right, and Labour’s put out theirs. And then depending on— so the voters then make the decision, depending on Labour gets so many votes, Green gets so many votes, then we have to negotiate post-election. And the influence of each party in a democracy should be based on how many votes they get, and so that’s how it’ll work. So, you know, you talk about the top tax rate – the reason we put that in there for each dollar over 140K was to pay for a big package of child poverty reduction.

Very big.

Norman: And so we think that that’s a critical investment for the future of New Zealand, and we’ll be going to the table arguing that. Labour has a slightly different approach, and we’ll obviously have to negotiate. And how much influence each side has depends on the votes. That’s how a democracy works.

Well, here’s a question for Grant Robertson. This week when the Greens launched that policy, they said that they want to do an audit – an audit of your costings. How do you feel about that? I mean, should you audit theirs or what?

Robertson: Look, our costings have been out there since June.

Yeah, but do you want to audit the Greens’ costings? Because this is the stage we’re at when you guys are trying to get a government together and you don’t trust each other’s figures enough, you want to bring in independent auditors.

Robertson: No, look—

Norman: It’s not that—

Robertson: Our figures will stand on their own merits. The Greens’ figures will stand on their merits. We put ours out in June. We’ve got a fully costed policy there. Everyone can look at it. It’s been there since June. No one’s blown any holes in it. We’re very confident of our costings.

Norman: Yeah, that’s right. It’s a matter of due diligence, of making sure that we’ve got the numbers right, because the challenge for us is to put it all together. I mean, Grant’s right.

Comments and questions

So a tax rate of 40p then.

More tricky stuff to try and pretend otherwise.

Robertson isn't pitching to the top 20 or 30% of the high income voters - so why would he confirm or deny tax hikes

The other 70% who are on less than $140,000 won't be upset with higher tax rates

So this is hardly headline news

What a great idea ! Punish the productive, weaken the economy and suck in a few votes all with the stroke of the political pen, History tells us all those things happen. Guess which one Labour/Greens care about? Well done if you chose suck in a few votes ! Promising to rob Peter to pay Paul always drags the Pauls out of the woodwork.

Good points, and what does Peter, or Pam, actually get out of this? Because I can tell you one thing, this will not eliminate child poverty in New Zealand. Poverty in the first world is seldom about money. A lack of money is a symptom of poverty, but it is not the cause of it. Therefore, throwing more money at it won't cure it. Take that money away and the poverty is still there. So I ask the question again. What does Peter, or Pam, get for their money?

When I get in to the top tax bracket I'll be happy as not winging about contributing a bit more to help make a better country

But you won't have to pay more - just do what others do. Put your fees up. Nothing like higher progressive taxes to widen the income gap.

Nobody stops you now from paying more tax to IRD to reduce poverty bro...go ahead and do that.

So the biggest opposition party is four weeks out from a general election, and either don't know, or won't tell us, if they will hike the tax rate(s), what they would hike them to and what the steps would be. They are waiting for the "junior"(sic) partner in the coalition to tell them what the answer is.

All we know is when Cunliffe was asked would he be increasing taxes, he answered with undisguised relish "You betcha".

And next year, when the economy starts going south, what would the rate be - 43%, 45%?

Heaven help New Zealand if these economic idealogues get in.

You should get facts before you comment. They have said they will to 35% greens want 40% it makes perfect sence to leave door open for compromise other wise you have to come out with lines like I DONT RECALL.

Like all socialists, what Robertson does not understand that a tax increase amounts to theft. Nor does he understand that people are not robots, and that they will have reactions and response to the tax hike, instead of turning up to work the next day unaffected by the tax hike.

The tax hike will not put $1 billion in Crown coffers. It may actually reduce. He does not understand that wealthy people, marginally comfortable at 33% will move to organise their affairs more intelligently and legally to minimise tax. This may include more donations to charity, down sizing and laying off workers, stopping further investment and the jobs that go with it, retiring early, or migrating elsewhere where it is warmer and has lower tax rates.

Most tax payers in the top tax bracket work to earn a living, a small minority have already earned their fortune and run businesses for the challenge, the rest are large overseas corporations. It is these two latter groups from which the real reactions will come.

Aside from the theft aspect, Robertson clearly doesn't understand the law of diminishing marginal returns as it applies to tax. Increasing the top rate by the 20% will not increase the net tax received from that tax bracket by anything like 20%. It will not increase the gross tax by anything like 20%.

What will happen is that the overseas corporates will pay more money back overseas through parent company management fees, and there will be less investment in businesses by those who have already made their money. There will be early retirements and there will be migration. And the IRD will spend more money on complex tax cases where people have changed their affairs to legally minimise tax.

It is a simple principle. If you continue to increase the size of the slice of the pie you take, people will stop baking pies or take their pies elsewhere.

But like Billy Bunter, socialists are simply greedy. They think the answer to other people's hunger is to keep taking more and more of the pies baked by those that taught themselves to bake. Taking bigger slices to feed the hungry is preferable to getting the hungry people to learn to bake their own pies.

Greed is not about how many pies you eat, that's gluttony. Greed is about taking more than your fair share and your fair share is what you brought to the table, not what you feel like taking.

You miss the point. Labour knows that playing on envy is a great vote getter. They also know high income tax rates do more harm than good, but votes are more important than economic management. .

I disagree. Like most socialists, they live in delusion, and don't actually understand. Cunliffe is a sincere socialist and actually believes what he chants. With Robertson it is a mix.

Ha ha ha, listen to all you rich little red necks - scared much - Cunliffe and Labour this time is the biggest threat to your selfish and greedy lives in the last 30 years. Time you realise you are just lucky, not better than the rest of us and helped those less fortunate. Who knows it may help liberate your one track "money, money, money" mind if you opened up those tight grubby fists of yours!

Not scared at all. To us this is just another business risk. As a precaution if the Labour Greens Internet Mana get in some of us have restructured our businesses to ensure minimum tax is gained from our offshore activities. Perhaps you might ponder the term rich..its simply think I'm rich, I think Bill Gates is rich, and someone living in the slums of Mumbai thinks you are rich and privileged. The difference between successful and non -successful (or rich and poor) people is that the successful ones have exercised their potential. Have you ever thought you "poor" people are doing society a disservice by not reaching your full potential and expecting others to pay for your deficiencies and shortcomings.

Well said Jenny.
Who was it wisely said " You can't help the poor by destroying the rich"?

A sportsman (Gary Player?) also said:" the more I practice, the luckier I get" Also applies to personal and business initiative.

The problem with Labour is that they are never 100% clear and accurate about any of their policies and the details of how they're going to work. Just look at the CGT fiasco. They won't even give you the details of how it's going to be assessed, the exemptions, how is it actually going to redirect investment into 'product' assets and why etc. to any degree of reasonable specificity because they don't even know themselves. I think they just hope that if they say it often enough, then everybody will believe it.

If you elect Labour you won't know what sort of loopy lala nonsense you are going to get. And let's not forget they are not the same as the last labour government of Helen Clark. They simply don't muster the numbers any more, this time around they are only about half the opposition and will make up a bit over half the government if elected. And yet they are still running around as though it is only a two horse race between them and National, and they are ones calling the shots! Now that to me is arrogance.

CGT is a case in point. When asked how it will work, Parker has said: after the election, if we win, we'll sit down and work that out (or words to that effect). And if, as he says, it will direct money into "productive assets", aren't they also going to be subject to CGT? So what's the point?

Productive assets that will be exempt from CGT, will include new kitchens, new bathrooms and swimming pools. All because they fall under the guise of a "family home".

And another point: when I die and leave my family home to the kids, then they sell it and divvy up the proceeds, will they be subject to CGT. If so, the phrase "the family home will be exempt " is wrong. It becomes a death duty which no one has mentioned so far.

The reason for this is none of them have ever created and managed wealth, so they don't understand the process of creation or what brings about the right outcomes. They don't understand economics, and they can't connect cause and effect.

Many sincerely believe that achieving a profit or a valuable outcome is all about chance. Not being able to see how wealth could be created, also believe rich people are ruthless and dishonest. This is because they could only ever envisage themselves getting wealthy by being dishonest. Because they think wealth is achieved by ruthlessness and dishonesty, they see equality in bringing the rich down a peg by 'equaling things out' Accordingly, inside of every socialist is envy, bitterness and a desire to possess other people's wealth.

Running a country successfully requires understanding economics and creation of wealth, in order that one can preserve peoples right to life, liberty and property. But because socialists don't understand right from wrong, or how things are supposed to work, they just live in misguided hope that it will all turn out OK. In the mean time, they start stealing from the rich to give to the poor, and giving themselves a good wicket on the way through. And like stealing, the more you do it, the easier it becomes and the harder to stop.

Labour are never 100% clear because they will ever have is individual flopping in the wind policies trying to treat effects, not cause. What they need are principles.

Frankly, getting sick of teh "wont rule it on or out" when it comes to valid policy question. That just makes it sound like there is something to hide or there is genuinley no position elelction year.......hmmmmm

Why stop at 40%? Make the top rate 66% like in the Muldoon years - in effect 51% as we now have GST at 15%.

What will be the result?

Well, socialism blossomed during the Muldoon years and NZ went backwards - from #2 in the OECD to #15 by the time that buffoon economic dwarf closet socialist was tossed out of office.

The problem with Labour is they do not take any notice of economists outside a small band of socialists, and they have nobody with real life business experience. Raising tax rates to increase revenue is no different from a motel operator increasing tariffs to improve his income. Just a fraction too much and he'll be staring out the window, scratching his backside and wondering why his income has fallen.

In the US when Ronald Reagan lowered the top rate to 28% in the 1980's, the total gross tax receipts soared. My tax advisor told me to forget the normal year end adjustments and tax deferments and to let it rip. The wealthy are typically not a stupid lot. Punishing success does little to help the overall economy.

So, Labour wants to abolosh secondary tax? All that will lead to is thousands of people owing money to the IRD - and the IRD looking like ogres chasing poor families and then writing off the debt anyway. Would not a better solution be that the IRD be FORCED to repay the overpaid tax to EVERYONE instead? They have the processes in place to check income from wages, dividends & interest and then after the deadline for filing tax make the refunds in August each year

Mmhmm. As someone who wouldn't be too far off the new top tax bracket being proposed, I personally don't care what the rate is - I only care about what is done with the tax haul "at the end of the day".

If it were up to me though, I'd lower the current top tax rate and align it with trust and company tax - then go after the multinationals doing business here but not paying the requisite tax.