In a shock story today there is talk that the trust tax rate may rise to 36%.
The government is facing a second major rebellion over its tax policy amid growing certainty that it’s planning to raise trust tax to 36 per cent.
The potential tax grab, which would affect hundreds of thousands of New Zealanders, has prompted opponents to form a fighting fund aimed at forcing a government rethink.
The protest follows a storm of opposition to legislation introducing a capital gains tax on overseas investments.
The Trustees Association believes the government is plotting to raise the trust tax rate from 33 per cent as part of its proposals to drop the company tax rate. Not only would the trust tax hike help compensate for reductions in the company tax take, it would also hit back at people using trusts to shelter their assets from the taxman.
The plan would create a new range of rates, with company tax cut from 33 per cent to 30 per cent, top personal tax cut from 39 per cent to 36 per cent, and trusts increased from 33 per cent to 36 per cent.
Association chief executive Errol Anderson said the plan would mean that children, often the beneficiaries of trusts, would end up paying more tax than giant corporates.
“That’s a very cruel tax -targeting people who can’t defend themselves. (The government) will see trusts as an easy touch for raising tax, unless we unite,” Anderson said.
Though no final decision had been taken, Dunne admitted one option, backed by the IRD, was equalising the top personal trust and income tax rates at 36 per cent, and added that the government had crunched the tax numbers on tax paid by trusts.