Are NZ banks being taxed properly?
Finance Minister Nicola Willis said she is continuing to receive advice from IRD on how income tax laws applied to the major banks in New Zealand, particularly compared with Australia.
Willis asked for the advice last year, but said no announcements would be made until Budget next year.
The key issues were around how the "parent banks" and branch banks in New Zealand interacted for tax purposes.
She said there was some "very arcane and complex tax law" in that area where the OECD had guidance, but New Zealand operated slightly differently.
ADVERTISEMENT
Willis was also looking at the Australian "major bank levy" which New Zealand did not have. This forced banks with more than $100 billion in liabilities to pay a levy to the government, raising significant sums a year.
Willis would not rule out applying something similar here, but she did confirm the Government was not looking at a windfall tax.
"There's a range of highly technical, highly complex issues with the way that banks are taxed, and we're just doing a check in to make sure that it's resulting in an overall fair system."
Willis said it was possible more revenue could be generated for the Crown if the Government found banks were not paying the full amount of tax expected.
Acting Prime Minister David Seymour was asked about the issue on Monday and said he believed banks were being fairly taxed.
"Some of the biggest taxpayers in New Zealanders are banks," he said, and stated they were all paying the 28% average tax rate as their company tax.
"There's nothing to suggest that they are not paying the same share that they would if they were any other kind of business."
ADVERTISEMENT
Asked about Willis' work, Seymour said, like most ministers, she was "always asking for advice, always tossing around the ideas". He suspected the result of that work would show banks were fairly taxed.
Seymour said, from what he saw, there seemed to be a "consistent pattern" in terms of what banks paid, and the question around any proposals to change the settings would need to be based on "fairness".
He pointed to a dairy, retail or manufacturing company that were doing "pretty much the same stuff, making the same profit and paying the same tax, would you treat them differently"?
"One of the core principles of taxation is that 'like taxpayers pay tax alike', and 'unlike, taxpayers pay tax un-alike' based on the size of the difference.
"So you'd start with fairness as your principle."
He acknowledged there may be more information he was not aware of. He also wanted more information on the major bank levy.
"I've seen the argument for that, and it goes something like this: Banks inevitably get bailed out.
ADVERTISEMENT
"If they're so big that their failure would affect the entire economy, maybe they should be putting something aside for that rainy day, if it happens one day. That's the argument.
"It's, in a way, a form of de facto deposit insurance."
He said it was an interesting argument, but would need to see the detail before deciding on supporting a proposal or not as ACT leader.
rnz.co.nz
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
an hour ago
- RNZ News
ACT rally to focus on supermarkets, free speech, economy
FOR SUNDAY AM ACT is holding their annual rally on Sunday in Auckland. Shown: ACT leader David Seymour at last year's rally in Auckland. Photo: RNZ / MARIKA KHABAZI The ACT Party is hosting its annual "Free & Equal" rally in Auckland, as it takes stock of the first half of its term in government and unveils a policy to help competition in the supermarket sector. ACT leader David Seymour said the Sunday event was a chance to look back at what had been achieved, as well as forward towards "what New Zealand needs from us and from the government over the next 15 months". But speaking to RNZ, he rejected the notion it marked the start of the election campaign, saying the best campaigning is simply doing "our job in government". The rally will feature policy updates from ACT ministers and MPs, as well as a keynote speech from Seymour, currently deputy prime minister, and an international guest speaker that is causing concern for a group in Pōneke. ACT MP Cameron Luxton will MC the event, and ACT ministers due to speak are Brooke van Velden, Nicole McKee, Karen Chhour, Andrew Hoggard and Simon Court. Updates will include outlining progress on crime, economic reform, and reducing regulatory burdens, as well as on the government's policy programme. This will be an opportunity for the party to outline to its supporters the progress made while in government, and look ahead to the second half of the political term. The party will also outline its policy to tackle the lack of competition in the supermarket sector, which will likely look at cutting red tape to help overseas players get a foothold. Seymour said the coalition was elected to tackle the cost of living, crime and co-governance, and added that the country now faces a "challenge with health." But he said in each of those areas the government could point to "significant progress", while acknowledging there were still "substantial challenges" - particularly around the cost of living. "Our challenge is to see economic growth occur so that salaries grow in a real way, keeping up with the increase in prices they've faced." Asked whether - like NZ First - the halfway point was an opportunity to turn into campaign mode, Seymour said no, because it was "important that we do our job in government." "That's the best campaigning that you can do," he said. Seymour acknowledged there would be a different set of issues in 2026 than what was present in 2023, and if that wasn't the case, "it means that we haven't done a very good job of addressing the tasks they gave us". "So we do need to start thinking about the next election, but it's not here yet." In terms of what ACT supporters had been indicating the key issues were, Seymour said there had been "six years of long trouble" starting with the terror attacks in 2019, the Covid-19 pandemic, then inflation and high interest rates, recession and unemployment. "Now we face, probably the most uncertain geopolitical situation in several generations. "What we need is some hope to stop scapegoating, to start problem solving, really rally together as the pioneering nation that we can be so that we can address some of those long term problems around productivity, healthcare, cost of living, and really just having a sense that now we're getting somewhere." Last year, the rally was sold out and broadcaster Paul Henry's keynote speech had more than 200,000 views online. ACT described its annual gathering as an opportunity to connect with supporters, outline the party's policy direction, and foster open debate on the country's future. The latest RNZ Reid research poll, taken after the release of the Budget in May, had ACT down 2.8 points to 6.8 percent . More recently, the Taxpayers' Union-Curia Poll, published on Thursday, showed ACT on 9.1 percent , unchanged from their last poll in June. There will also be an "international guest keynote" from Dr James Lindsay, an American author, mathematician, and "prominent advocate for free speech". "Dr. Lindsay is one of the world's leading lights in challenging ideological extremes," Seymour said. "His insights on defending free expression and liberal values are especially relevant in New Zealand today." The Pōneke Anti-fascist Coalition has raised concerns about the ACT party hosting Lindsay, claiming he peddled harmful conspiracies and held radical views. The group was founded in 2022 following the occupation at Parliament. Since then they've organised various rallies and community events to show opposition to "far right ideas". A member of the group, Anne Campbell, said she was concerned the party had invited Lindsay to "rark up their base" and pointed to an article on the Southern Poverty Law Centre website outlining claims by Lindsay. The SPLC was established in 1971 to carry on work from the civil rights movement in the United States of America. Its website states it works in partnership with communities to "dismantle white supremacy, strengthen intersectional movements, and advance the human rights of all people". The SPLC article highlighted statements by Lindsay, including reference to the pride flag as "the flag of a hostile enemy": Screenshots show a tweet under Lindsay's handle @ConceptualJames. Lol what? It also highlighted a post on social media by Lindsay from 2023, saying "Drag Queen Story Hour is an initiation rite into the cult of Queer Gnosticism". Drag Queen Story Hour is an initiation rite into the cult of Queer Gnosticism. The tweet linked to a podcast on Lindsay's website stating "Queer Theory is the doctrine of a cult". The synopsis for the podcast told listeners to join Lindsay to "understand our danger." "This discussion will not only lay Queer Theory bare for the social-spiritual cult belief system that it is, but it will also make sense of the destructive phenomena like sexual graphic novels in our school libraries, Drag Queen Story Hour, and the relentless push for queer and trans everything into all aspects of our culture. Join him to understand our danger." Campbell said it was "really troubling" to bring these ideas into New Zealand and further "stoke that kind of hatred". She acknowledged Lindsay may not directly be "doing damage to minorities himself" but said it was "poisoning the well of political discourse and turning it further right". Seymour told RNZ he admired Lindsay's book Cynical Theories and met him while he was in New Zealand earlier in the year. "We got together, and we hit it off, and I think he's a very thoughtful and decent person." The Free Speech Union hosted Lindsay for a speaking tour earlier this year , where he also appeared on TVNZ's Q+A . In response to the concerns of the Pōneke Antifascist Coalition Seymour said he did not agree with the description of the pride flag as an enemy flag. "I march in the Pride Parade most years myself, so I wouldn't say that I agree with this. I wasn't aware that James Lindsay had said that. "If he has, it doesn't really bother me, because I've got lots of friends I disagree with, and I think it's healthy. "If I agreed with everything that everybody I associated with had ever said, we'd have a very boring place or maybe no friends." In regards to the claims about Drag Queen Story Time, Seymour said parents could decide for themselves who read stories to their children. "I don't really know why anyone else would think it was their business." The concerns were coming from a "pretty obscure extreme left so-called Anti-Fascist group," Seymour said. "They're entitled to their view, but I'm certainly not going to let them define what I think," he said. "People are a little tired of cancel culture and ideological purity tests." Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Otago Daily Times
5 hours ago
- Otago Daily Times
Hydro lakes at 101% of average
Lake Pukaki and the hydro canal. PHOTO: MERIDIAN ENERGY Meridian's hydro lakes are in good shape as New Zealand moves into the second month of winter, thanks to regular rain, careful balancing of hydro and wind generation as well as a proactive approach from the electricity industry to boost security of supply, Meridian chief executive Mike Roan says. "Supply being managed carefully and low spot prices — this is the market doing what it was designed to do and working in the interest of all New Zealanders," a statement from Mr Roan said. "The welcome boost we've seen in our hydro storage is the result of regular rain since April, rather than the damaging events we've seen in other parts of the country over the last week." Across the country, controlled hydro storage was at 101% of average for the time of year. Among the storage lakes that Meridian manages, the Waiau catchment (Lakes Te Anau and Manapōuri) is 89% full, or 131% of average for the time of year, while Lake Pūkaki is 61% full, or 93% of average for the time of year. "That storage, along with increased thermal fuel reserves, has seen wholesale [spot market] prices soften considerably, with average prices last week of $91 in the North Island and $85 in the South Island. "Forward market prices at Otahuhu for 2025 have also halved, having fallen from $300/MWh in March and April to $150/MWh currently." At 11.40am on Wednesday, Meridian was generating almost 1900MW. "We produced 106GWh on the Waitaki chain in the week beginning June 23, out of a total 250GWh across all of Meridian's assets. "Of that, 207 was hydro, and 43 was wind," a Meridian spokesperson said.
RNZ News
13 hours ago
- RNZ News
US customs duties top $100 billion for first year
By David Lawder , Reuters Shipping containers are stacked on container ships at the Port of Los Angeles on 25 June, 2025, in Los Angeles, California. Photo: AFP/ Getty Images - Mario Tama MARIO TAMA US customs duty collections surged again in June, as US president Donald Trump's tariffs gained steam, topping $US100 billion for the first time during a fiscal year and helping produce a surprise $27b budget surplus for the month, the Treasury Department has reported. The budget data showed that tariffs were starting to build into a significant revenue contributor for the federal government, with customs duties in June hitting new records, quadrupling to $27.2b on a gross basis and $26.6b on a net basis, after refunds. The budget results are likely to reinforce Trump's view of tariffs as a lucrative revenue source and as a hammer to enforce non-trade foreign policy. On Tuesday, he said "the big money" would start to flow in, after he imposes higher "reciprocal" tariffs on US trading partners on 1 August. US Treasury Secretary Scott Bessent said on X that the results showed the US "reaping the rewards" from Trump's tariff agenda. "As President Trump works hard to take back our nation's economic sovereignty, today's Monthly Treasury Statement is demonstrating record customs duties - and with no inflation!" Bessent said. Another promise made. Another promise kept. Our nation is reaping the rewards from @POTUS 's America First agenda. As President Trump works hard to take back our nation's economic sovereignty, today's Monthly Treasury Statement is demonstrating record customs duties – and with… For the first nine months of fiscal 2025, the customs take reached records of $113.3b on a gross basis and $108b on a net basis, nearly double the prior-year collections. The US government's fiscal year ends on 30 September. Based on those results, tariffs have now grown into the fourth-largest revenue source for the federal government, behind individual withheld receipts at $2.683 trillion for the fiscal year, non-withheld individual receipts at $965b and corporate taxes at $392b. In the space of roughly four months, tariffs - as a share of federal revenue - have more than doubled to about five percent from about two percent historically. The June budget surplus represented a turnaround from the $71b deficit in June 2024. The new tariff-related revenue helped boost total budget receipts last month by 13 percent - or $60b - to $526b, a record for that month, the US Treasury said. Outlays in June fell seven percent - or $38b - to $499b. Adjusting for calendar shifts of some revenue and benefit payments, it said there would have been a budget deficit of $70b in June, along with a year-ago adjusted deficit of $143b. The overall year-to-date deficit, however, increased five percent - or $64b - to $1.337 trillion, as outlays rose for healthcare programmes, Social security retirement benefits, defence spending, debt interest and the Department of Homeland Security, the US Treasury said. Receipts for the first nine months of the fiscal year rose seven percent - or $254b - to a record $4.008t, driven in part by withheld taxes from higher employment and wages, while outlays grew six percent - or $318b - to a record $5.346t. The Treasury's interest costs on the national debt continued to grow, exceeding all other individual outlays at $921b for the first nine months of the fiscal year, up six percent - or $53b - from the year-ago period, but the Treasury's weighted average interest rate largely had stabilised at 3.3 percent at the end of June, up two basis points from a year ago, a Treasury official said. Earlier this week, Bessent suggested a steeper ramp-up in tariff collections, telling a cabinet meeting that calendar-year 2025 collections could grow to $300b by the end of December. At the June run rate, gross customs collections would hit $276.5b in six months, which means reaching Bessent's target would require some increases. Ernie Tedeschi, economics director of the Budget Lab at Yale University, said it may take more time for the tariff revenue to fully ramp up, because businesses and consumers have sought to front run the duties by buying ahead. Once that effect fades and Trump implements higher "reciprocal tariff" rates after a 1 August deadline, the Treasury may collect an extra $10b in tariffs per month, bringing the total to $37b, he said. "I think there's a significant risk... that we get addicted to tariff revenue," said Tedeschi, who served as a White House economic adviser during the Biden administration. He added that tariff income could fade over time, as businesses and consumers adjust their behaviour. This week, Trump has ratcheted up his tariff actions, announcing 50 percent levies on copper imports and goods from Brazil and a 35 percent tariff on Canadian goods , all due to start on 1 August. The Trump administration is preparing more sector-based tariffs on semiconductors and pharmaceuticals. - Reuters
