Fuel crunch and rising debt more reason to reform tax system, says lobby group
Wednesday, 15 April 2026
Lobby group Tax Justice Aotearoa has released its suggestions for tax reform, ahead of the November election, calling for a more “progressive” income tax regime, a comprehensive capital gains tax, an inheritance tax and a wealth tax.
Committee member and former Council of Trade Unions economist Bill Rosenberg said the fuel crunch and growing impacts from climate change showed the need for a greater role for government, which it couldn’t take on without more revenue.
The current Government was not fronting-up to the fact it was not getting on top of its deficits, he said.
The scope of the changes the lobby group has called for go far beyond those envisaged by the Labour Party, which endorsed only a limited extension of taxes on capital gains when it announced its tax policy in October.
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Tax Justice Aotearoa chairperson Glenn Barclay said its own proposals would move the tax system closer to the OECD “norm” than the current system which “relies disproportionately on income tax and GST and does not tax wealth, or the gains from wealth, in any meaningful way, other than through local government rates”.
The lobby group, which is funded by donations, recommended a combined inheritance and gift tax modelled on Ireland’s Capital Acquisition Tax which some in Labour are understood to view favourably.
The Irish tax means people generally pay 33% tax on the total value of any inheritances or gifts they receive over the course of their life — other than as a result of the death of their spouse — over and above a tax-free threshold of about $800,000.
Barclay said New Zealand was in the early stages of “the largest wealth transfer in history” as boomers died and handed down their wealth.
“While many parents understandably value passing on money or other assets to their children, it is the excesses that should be avoided,” the lobby group’s 37-page policy statement said.
“Acquiring wealth through inheritance … is simply a windfall. Yet it gives some people an advantage, sometimes substantial, solely due to who their parents were.
“That leaves less available for others to start out in life, and weaker public services to assist them. They may find it hard to progress in work or business when competing against those with the advantage of wealth, compounding inequalities and reducing equality of opportunity.”
Tax Justice Aotearoa is calling for income tax settings to be tweaked so people on higher incomes paid more, and those on lower incomes less.
One of its suggestions is a tax-free threshold on the first $5000 of people’s income, but which would be gradually phased out as people’s earnings rose above $80,000 a year, matching the approach of the UK.
A capital gains tax should apply to all assets including buildings, land, shares and businesses, but with an exemption for the family home, it said.
It also backed an annual wealth tax, noting Treasury research that the wealthiest 10% of households owned 67% of household wealth, and the top 1% owned 26% of it.
But Barclay said that could be configured narrowly to tax only extreme wealth if a comprehensive CGT and inheritance tax was also in place.
Ahead of the Budget in 2023, the former Labour government considered plans for a 1.5% annual tax on net wealth above $5 million, excluding assets such as the family home, but rejected that after a “Captain’s call” by party leader Chris Hipkins.
“A net wealth tax is a viable policy response to Aotearoa New Zealand’s growing wealth inequality, revenue inadequacy, declining tax progressivity and demonstrated unfairness,” Tax Justice Aotearoa said.
Former senior Labour minister David Parker also backed a capital gains, wealth and inheritance tax on his exit from Parliament, saying all three were necessary to cover the bases.
Labour revenue spokesperson Deborah Russell said the group had “some really good suggestions”.
“Whether or not we would take them all up is a different matter. There’s two things we’ve got to consider; whether it’s fair and whether it's workable, and those are different questions.”
Labour had set out its tax policy, which was centred around its proposal to extend tax on capital gains on property, she said.
“We’re of course going to have more tax policy than that, but it will be centred around the integrity of the tax system and the transparency of it.
“Whether there would be further changes is a matter, I think, for a future election, rather than this current one.”
While elements of Tax Justice Aotearoa’s proposals were “fairly commonplace overseas” and its focus on fairness could be described as mainstream, an annual wealth tax was highly unusual, Russell said.
Critics of wealth, inheritance and capital gains taxes tend to argue they discourage wealth creation, including entrepreneurship, and can be difficult to administer.
Rosenberg said Tax Justice Aotearoa expected some “knee-jerk reactions” to its suggestions and would be pleased if there was progress in any of the areas it was highlighting.
“We’re trying to open this up as an area of public debate, rather than one where it’s automatically shut down and people say increasing taxes is just off the agenda.
“It’s becoming obvious governments cannot continue to function properly and do the things that people expect of them without more revenue, so it is inevitable we have to debate these things.”
Tax Justice Aotearoa’s main recommendations
Making income tax and GST more progressive, for example by:
Making the first $5000 of income tax free.
Taxing income over $150,000 a year at 50%.
Abating the tax-free threshold for high earners.
Reducing the rate of GST.
Capital gains, wealth and inheritance tax
Taxing capital gains on most assets but not the family home.
A tax on inheritances and gifts people received above a lifetime threshold, modelled on Ireland’s Capital Acquisition Tax.
An annual wealth tax on the country’s wealthiest individuals.
Business tax
An excess profit tax for certain industries, modelled on the UK’s 3% banking surcharge.
Tightening the tax treatment of interest deductions and shareholder loans.
Reviving a Digital Service Tax on the local revenues of technology multinationals.
Tackling tax avoidance and transparency
Removing tax advantages for trusts.
Creating a publicly searchable register of the beneficial owners of companies and trusts.
Reducing tax secrecy by requiring Inland Revenue to provide more information to the public about the administration of tax.