NZ minister defends record against inequality claims

New Zealand Finance Minister Bill English on Wednesday defended his government's record against claims that the country's wealth gap is growing faster than that of many of other developed countries.

"The government has maintained a redistributive tax and income support system that supports low and middle income families and helps New Zealanders through times of need," English said in a published speech to the Trans-Tasman Business Circle in Wellington.

At any particular time, a large number of households effectively paid no tax as the income tax they did pay was exceeded by the amount they received in welfare benefits, tax refunds, paid parental leave and accommodation subsidies, he said.

The New Zealand Treasury estimates that households earning more than 150,000 NZ dollars (117,518 U.S. dollars) a year -- the top 12 percent of households by income -- would pay 46 percent of gross income tax this year, but this amounted to 76 percent of net income tax once welfare, tax refunds and other benefits were taken into account, he said.

By contrast, households earning under 60,000 NZ dollars a year - - half of all households -- were expected to pay 11 percent of net income tax.

"When we take income support payments into account, as a group they will actually pay no net income tax at all," English said.

"That's because the 2.7 billion NZ dollars of income tax they are expected to pay will be more than offset by the 8.1 billion NZ dollars they will receive in income support."

Last month, the Organisation for Economic Co-operation and Development (OECD) recommended that the New Zealand government introduce a capital gains tax in order to rebalance the country's widening wealth gap and curb speculation on the housing market.

In its Economic Survey of New Zealand 2013, the Paris-based organization of developed nations said per capita incomes were " well below the OECD average" and suggested "the main structural challenge will be to create the conditions that encourage resources to shift towards more sustainable sources of prosperity. "

In August last year, the Ministry of Social Development issued a report saying that inequality had decreased significantly from 2009 to 2010, before rising in 2011 "to its highest level ever."