Dunne: Top tax rate increase has led to major distortions
UnitedFuture leader Peter Dunne says the Tax Working Group’s report shows that putting up the top tax rate in 1999 has led to severe distortions within New Zealand’s tax system.
Speaking in Parliament this afternoon in the debate on the Prime Minister’s Statement, Mr Dunne, who is also the Minister of Revenue, said the Tax Working Group’s report showed that since 1999:
* There has been a significant increase in the number and level of trust income, with significant spikes in those earning just below the top personal tax threshold.
* At the same time, the rate of growth in top incomes has slowed significantly, despite strong economic growth. Even so, the 5% of taxpayers assumed to be in the top tax bracket in 1999 has now grown to around 9%, although the actual figure is likely to be much higher.
* Some higher income earners are manipulating their declarable taxable income to boost their eligibility for Working for Families Tax Credits.
* A major hole in the tax treatment of investment property, with a $200 billion investment declaring $500 million in tax losses.
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