The Government has moved to address concerns about inequality in the tax system by advising ordinary New Zealanders to become significantly richer.
The initiative follows research finding that middle-income New Zealanders can face a substantially higher effective tax burden than those at the very top once income from growing wealth is taken into account.
Under the new Personal Prosperity Responsibility Framework, wage earners unhappy with their position will be encouraged to reduce their reliance on taxable salaries and instead acquire several million dollars of appreciating assets.
Officials said this would preserve the present tax system while giving every New Zealander an equal opportunity to escape from the part of it specifically designed for them.
“People sometimes talk about the wealthy as though being wealthy is some exclusive club,” said Revenue Fairness Commissioner Martin Cholmondeley-Firth.
“It isn’t. There is absolutely nothing preventing a supermarket worker from owning a large private company, three commercial buildings and an intergenerational investment portfolio.”
The programme initially proposed helping lower-income households accumulate capital but this was abandoned after officials estimated it could cost money.
Instead, Treasury has recommended a nationwide financial-literacy campaign titled Have You Considered Considerably More Money?
A pilot seminar in Lower Hutt will teach participants how to transform their fortnightly salary into unrealised capital gains by first purchasing a controlling interest in an infrastructure company.
Attendees unable to complete the first exercise will be referred to budgeting services.
The Government has also rejected suggestions the tax system favours particular forms of wealth, noting that the same rules are theoretically available to a 24-year-old pharmacy assistant in Hamilton as to somebody whose family owns Hamilton.
Employers have welcomed the initiative but warned there could be short-term disruption if large numbers of staff stop receiving wages.
Business groups are therefore developing “salary-neutral remuneration”, under which employees continue coming to work but their pay is replaced by an appreciating equity position in the vague possibility that something good might eventually happen.
Banks have expressed cautious support.
One bank has already introduced a First Billionaire Loan, requiring borrowers to provide a 20% deposit of $200 million, proof of income and their parents’ billionaire guarantor.
Officials expect the policy eventually to eliminate tax inequality altogether.
Once every New Zealander is extremely wealthy, Treasury modelling shows the country will have nobody left to clean its offices.
The work will then be contracted to consultants.