Tax Election 2026: Who Really Pays the Bill?

Dr Eric Crampton, chief economist at the New Zealand Initiative, unpacks tax as a defining election issue, noting that even without new taxes, "fiscal drag" from inflation is quietly pushing more Kiwis into higher tax brackets and driving up government revenue as a share of GDP.

He argues that post-COVID spending has outstripped pre-pandemic levels far beyond what population ageing alone explains, meaning voters must judge whether they're getting real value for that extra spend, or face either higher taxes or cuts. Dr Crampton is sceptical of taxing "the rich" alone or introducing a wealth tax, warning both often drive capital and investment offshore, and instead argues Labour's proposed capital gains tax is messier than needed given decades of existing workarounds. He instead favours raising GST paired with a low-income rebate (Canadian-style) as the least distorting way to fund government if more revenue is truly required ([www.nzinitiative.org.nz](https://www.nzinitiative.org.nz)).

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