Green Taxation and Monetary Policy Updated: 2011
Vision The Green Party envisages a tax system that supports communities and the environment, encouraging sustainable behaviour while providing sufficient revenue for the effective operation of Government.
Key Principles 1. Taxes come from a broad base to avoid excessive reliance on income tax and in particular the tax base should include: 1. Personal and business income taxes that reward sustainable human activity and enterprise; 2. Consumption and expenditure taxes that discourage wasteful use of energy and resources; 3. Targeted environmental taxes designed to reduce and eliminate behaviours that are not sustainable in a finite world; 4. Taxes that acknowledge the value of common property through resource rentals, and which encourage long-term sustainable business practices. 2. Investment income from different sources is treated equally for tax purposes. 3. Tax policy contributes to the overall quality of life of New Zealanders and the sustainable development of New Zealand, and to this end: 1. Productive and sustainable work and enterprise should be encouraged and speculative investment in non-productive assets should be discouraged. 2. The taxation burden should be reallocated away from income and towards resource use, waste, and pollution. 3. Resource rentals and related eco-taxes should be extended to promote more responsible management of the planet's finite resources. 4. Those in society who have the least ability to pay tax should face the least burden, while those who have a greater ability to contribute to the welfare of society actually do so. 5. Concentration of income and wealth should be discouraged and the gap between rich and poor narrowed.
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6. New Zealand's local economy should be strengthened and foreign purchases of local assets should be limited. 7. The tax system should be consistent, fair, transparent and simple, and avoid unintended consequences. 4. Monetary policy assists people and businesses to plan their lives with a degree of certainty. 5. Monetary policy contributes to the overall quality of life of New Zealanders and the sustainable development of New Zealand;
Specific Policy Points 1. Ecological Taxes Ecological tax reform is a simple idea: shift taxes off work and enterprise, and onto waste, pollution and scarce resources. Those who waste and those who pollute, pay more. Clean business pays less and everyone pays less income tax. This Green tax shift will create a more sustainable economy, and it's happening now in many European countries. Ecological tax reform is gradual process, and needs to be worked through with all concerned. To help provide the revenue for removing tax from work and enterprise and better align our tax system with sustainability goals, the Green Party will: 1. Begin a process of ecological tax reform by setting up a working group. The working group will:
look at all existing taxes and possible new eco-taxes work with the community, unions, Maori, and business to find the best way to use ecological tax reform to set the economy on a more sustainable course; identify ways to make the tax and income support systems work together better develop recommendations for Government;
2. Empower central and regional government to introduce a water levy on commercial users for all water used on a volume basis. Such a levy should reflect all direct and indirect costs of water management and monitoring and be structured in a way that encourages efficient use of water
2. Income tax Taxes can be a powerful force in supporting our communities and our environment, both through the signals they send, and through the services they support. The Green Party supports income tax reductions to offset resource taxes, but will apply these to the bottom of the tax scale, not the top rate, so that everyone benefits. The Green Party will: 1. Introduce a tax-free threshold of $10,000.
Authorised by Jon Field, Level 2, 17 Garrett Street, Wellington
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2. Marginal tax rates and thresholds will be: 0% for $0-$10,000, 19% for $10,001 to $42,500, 33% for $42,501 to $80,000, and 39% from $80,001. 3. Ensure beneficiaries receive the full advantages of any changes to income tax rates. Adjust benefit abatement rates to address the problem of benefit abatement for those moving into employment (see Income Support policy).
3. Capital Gains Tax In order to help reduce distortions created by the tax system, the Green Party will: 1. Support the introduction of a comprehensive capital gains tax on inflationadjusted capital gains at the time of realisation. Any capital gains tax must apply to assets in New Zealand that are purchased and sold by corporations or people living overseas as well as assets sold or purchased by residents. 2. Support a blanket exemption for the family home from any capital gains tax. 3. Support treating taxable real capital gains as income for tax rate purposes and investigate mechanisms to allow the income from capital gains to be spread over several years for New Zealand residents.
4. Monetary Policy The Green Party supports a broader and more balanced approach to monetary policy, including: 1. Better coordination of monetary and fiscal policy, initially through requirements to comment on how this coordination is occurring in the Reserve Bank Act and Fiscal Responsibility Act. 2. A review of the conduct of monetary policy in light of the likely increased frequency of resource shortage drivenprice shocks, including the need for better integration between monetary policy and policies designed to assist adjustment to such price shocks. This could include consideration of changes to the Reserve Bank Act to make explicit the fact that the Bank currently considers employment and external balance of trade issues when setting monetary policy. 3. Measures to limit future asset (especially house) price inflation such as: 1. Introducing a comprehensive capital gains tax exempting the family home (see section 3 above); 2. Reserving land ownership for New Zealand citizens and permanent residents; 3. Significantly expanding the supply of ecologically sustainable affordable housing, including expanded public housing initiatives (refer Housing Policy for details). 4. Consideration if the exchange rate is at unrealistically high levels in the medium term, of a more actively managed exchange rate through measures designed to reduce the attractiveness and profitability of currency speculation.
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5. Reviewing the extent to which New Zealand's exposure to risky international financial instruments (such as derivatives) is consistent with sustainable development, with a view to encouraging the financial sector to take responsible, long-term financial decisions and avoid excessive risk to economic stability
Authorised by Jon Field, Level 2, 17 Garrett Street, Wellington
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