Nothing new: Morgan regurgitates policy on equity tax
The first policy of Gareth Morgan's new Opportunities Party repeats a call he made earlier this year for a tax on equity to make the revenue system fairer.
The tax policy, which matches the content of a Morgan Foundation report on tax released in April, proposes deeming a minimum rate of return on all productive assets, including housing and land.
Those that already declare at least that level of income will be unaffected and those that don't will pay more, the party's tax policy statement says.
It says about 80% of adults will be either unaffected or pay less tax as a result of the suggested tax reform and 20% will pay more. "But don't fret, we can afford it," says the wealthy Mr Morgan. "I will pay considerably more tax, so will John Key."
It will mean people could be taxed for owning the house they live in or even for an expensive car.
Overall, the fledgling party's package will be tax neutral, with every additional tax dollar collected given back via income tax cuts, it says.
Mr Morgan, who's holding a media conference in Auckland this morning to comment on the policy, says there's a big pool of untaxed income represented by the benefits derived from the equity people have in their houses and other wealth they've accumulated yet that wealth produces no or little taxable income.
It isn't a capital gains tax, he says. "It's much more efficient and fair than that."
House prices have been growing faster than incomes for decades and he says the country has to "shut the gap if we're to give more New Zealanders more opportunities."
Mr Morgan says the broad tax will make housing more affordable over time and lead to more sensible investment of capital, making more available to invest in productive businesses that create jobs.
He says it will also encourage a trickle down from those who have stockpiled wealth courtesy of the existing tax loophole that owners of capital have exploited.
The policy suggests stepping the required minimum taxable earnings rate up over a few years so asset owners have time to adjust and allowing pensioners who own their homes to pay the tax via a mortgage with the Inland Revenue Department, payable on a change of ownership.
It will also allow businesses facing a temporary downturn to defer paying their minimum income tax for up to three years, with use-of-money interest to be charged.
It also proposes following Britain and Australia's lead in dealing with tax avoidance by foreign corporations immediately although more detail on that policy will be released in the lead up to Christmas.