Proposed wealth tax will hurt the cash poor

A South Auckland poverty advocate says the Green Party’s proposed wealth tax will hurt people who are not wealthy.

The proposed wealth tax would introduce a one percent tax on net assets over $1 million and two percent tax over $2 million.

The proposal excludes housing wealth under a mortgage from the tax calculation.

The same goes for “normal household goods worth less than $50,000”, including vehicles.

The Green’s anticipate the wealth tax raising $7.9 billion in its first year.

The cash-poor who will be taxed

Māngere Budgeting Services CEO Darryl Evans (pictured) is concerned about the proposed tax policy.

Asset-rich, cash-poor people will be caught in its net. These include people who own a home but have low incomes.

“I totally believe that the wealthiest in the country should be paying their fair share of tax and many avoid tax. But actually, we’ve got clients that are asset wealthy, they own a $1 million house but they are cash poor – there is simply not enough money and they are going to food banks.”

Evans said the policy will affect families who pass homes down from generation to generation. They will also be hit with the tax.

“If it’s a Polynesian family, they simply won’t sell that house,” he says.

“It will just be passed down, passed down, passed down. It’s not a particularly well-built house, it’s falling apart essentially.”

High house prices, especially in Auckland, have put many people into a position of being impacted by the policy, not all of whom are wealthy.

In August, the average house price in Auckland surpassed $1 million, which is a 5.4 percent increase in a year.

In Evans’s view, Labour’s new top tax rate is a better way of ensuring the rich pay their fair share, as it would introduce a new tax rate of 39 percent for income over $180,000 a year.


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