How come? As this Blog has reported before, Labour is plotting to stand for election 2026 on a platform of capital, asset & wealth taxes. The party is hoping NZ's economy will keep stagnating and social services, especially health, become even more run down. Hipkins (or his replacement) would like to argue the only way to fund them better is through such taxes. How does that platform end sovereignty of Parliament? Because capital, asset and wealth taxes won't be applied to Māori Authorities. They already pay lower income tax rates. As the IRD explains, "Māori authorities file annual returns, have a reduced provisional rate of 17.5% and special rules for their income tax ..". Since their income is presently small on a national scale, this special tax rule doesn't attract news headlines. However, when it comes to their holding of capital, assets and wealth, it's diametrically opposite. Iwi Trusts and companies comprise the biggest landowners in New Zealand: Ngāi Tūhoe owning 243,495 hectares, CNI Holdings Limited (made up of Ngāi Tuhoe, Ngāti Manawa, Ngāti Tūwharetoa, Ngāti Whakaue, Ngāti Whare, Raukawa, and Te Arawa iwi) at 126,147 hectares, Ngāti Tūwharetoa at 113,414 hectares, Ngāi Tahu at 102,136 hectares, and Mangatu Blocks at 44,663 hectares.
Treasury has already stated that these Authorities should be exempt from capital, asset and wealth taxes (which were advocated last week by the departing NZ Treasury Secretary). If you don't believe me, read this line from Treasury's Long Term Fiscal Position Statement in 2021, "Taxing capital gains comes with an economic cost by increasing the overall tax rate on capital. However, it .. would improve the integrity of the tax system. Specific consideration would need to be given to the treatment of Māori freehold land and iwi assets". In non-bureaucratic talk, that means capital, asset & wealth taxes would not apply.
How would that exemption end sovereignty of NZ's Parliament? Because one of the primary defining powers of Parliament is its ability to levy taxes. That's what makes the sovereign the sovereign. Private citizens cannot force other citizens to pay them money by declaring a tax on that other person. That is how "the State" differs from an individual like you and me. Once the State no longer has powers of taxation over particular groups in a society, it is no longer the sovereign authority of that nation. Since Labour would not dare to impose capital, asset and wealth taxes on a Māori Authority - which wouldn't pay even if it was charged - Labour's tax plan under Hipkins is to propose the relinquishing of the sovereignty of NZ's Parliament within the next three years.
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