The election result last year brought a wave of optimism.
During the campaign, the now governing parties all committed to delivering overdue (and much needed) tax relief to hard-working Kiwis. We had promises of cut backs to wasteful spending, and consigning many of Labour’s unaffordable taxes to the policy scrapheap.
But three months into the new Government, the election promises are already falling away.
A few weeks ago, Jordan wrote to you about the enormous 39% “Trust Tax-grab” – a Labour Party legacy of Grant Robertson’s that Nicola Willis appears to have U-turned on. Recall that IRD advised that Labour’s (and now National’s) trust tax-hike will result in 89% of New Zealand’s trusts being over-taxed. That’s family trusts, farm trusts, and family owned businesses set to be in the IRD’s sites.
In the days and weeks to come, we’ll have more to say on the Trust Tax-grab, but today I’m emailing you about a totally separate U-turn where National are poised to lock-in Labour’s high-tax legacy.
For weeks, our grassroots team have been fielding questions from hundreds of our supporters who have realised that despite the pre-election promises, they are about to be hammered.
National are preparing to keep Labour’s 15% App Tax 
Labour’s App Tax is a 15% sales tax paid for by the mum and dad accommodation providers, takeaway joints, and ride share drivers. The App Tax hits sole-traders who sell their services through an app or website such as Uber or Airbnb. It will add even more to the costs of living for every Kiwi who buys or books services online.
This is one where the media, yet again, aren’t doing their job so we’re blowing the whistle before it is too late.
Labour managed to spin this new tax as hitting the big tech companies. But all of the app/website companies where the App Tax applies are already paying GST on their income. The big companies are just the scapegoat. According to IRD, 100% of the App Tax hits small-scale suppliers and Kiwi consumers who will be paying more from 1 April.
For any other small or micro-business, IRD’s $60,000 de minimus amount applies before a taxpayer is required to register for GST. But not under this new App Tax. If you rent your spare bedroom, or family bach for just one night through an app, your earnings will uniquely be taxed.
Or say you want to give Uber a try? If you register to drive just for a single day you too, will be hit in the pocket (along with your passenger!).
This new tax will see you pay up to 15% more across the board when buying services through apps from 1 April
Before the election, Nicola Willis pledged to scrap Labour’s App Tax. In fact, the National Party even launched a website called [checks notes] ‘Scrap Labour’s App Tax!’.
But just weeks into Government Ms Willis wants to plough ahead with Grant Robertson’s policy. That is despite IRD officials indicating that the tax is so complex, and unfair, they assumed it would not proceed and had stopped working on it. But that has suddenly all changed.
To put it simply, this isn’t what New Zealanders voted for, and for those struggling to make ends meet driving for Uber, or renting the spare bedroom on Airbnb, it’s a kick in the teeth.
Just because the election is over, doesn’t make the tax any fairer.
The App Tax is a holiday tax
- The App Tax hikes the cost of taking the family away for a weekend Bookabach or summer Airbnb.
- A $300 over-night stay could cost up to $45 more
The App Tax is a ride-share tax
- Making your commute with Uber or Ola more expensive
- The $70 trip from Auckland airport into the CBD will cost up to $10 more
The App Tax is a takeaways tax
- Kiwis are already having to pull back on Friday night Uber Eats and Delivereasy. With the App Tax, delivery fees may go up by 15 percent
the App Tax is:
Unaffordable
Before the election, National acknowledged the App Tax will lead to you paying up to 15% more on delivered takeaway, rideshares or trips away. Your well-earned treats are about to get a whole heap more expensive.
Unworkable
Big firms already pay GST – it’s the little guys who are being targeted by this unfair tax raid. With all the new red tape and costs, mum-and-dad providers will be driven out of business. With most only using platform services to supplement their income by a small amount, National are getting in the way of families trying to make ends meet
An unkept promise
National didn’t just promise tax relief, they specifically promised to swipe left and Scrap the App Tax!
In fact, one of the best cases against this App Tax came from then Opposition Finance Spokesperson Nicola Willis before the election. In a media release last year, she said:
“This is simply another tax grab from Labour to fuel their wasteful spending. When they run out of their own money, they come after yours…
“Inland Revenue advised the Government that this tax would be ‘passed on fully to consumers’ and that ‘[this] will increase the cost to consumers of purchases made through digital platforms by up to 15 per cent’.
“This means that someone that uses a ride sharing app twice a week could be paying hundreds of dollars extra a year…
“Rather than hitting multinationals as Labour claimed it would, this tax will instead hit Kiwi app users and the Uber drivers, Bookabach providers and the like who use apps to connect with their customers.
“We will fight against this new tax every step of the way. National opposes the App Tax and if elected we will reverse it.”
We can’t let Nicola Willis fall at the first hurdle. We elected Christopher Luxon and Nicola Willis to take the tough decisions, cut the waste, balance the books, and put New Zealand ‘back on track’. We have to stiffen their resolve.
Saying No to the App Tax, is an important step to ensure the Government follows through on what New Zealanders voted for, and doesn’t fall back to a Labour-lite, unaffordable, pathway of fiscal drift.
Thank you for your support.
 | Callum Purves Head of Campaigns New Zealand Taxpayers’ Union |