The National Party will release its long-awaited tax plan tomorrow, leader Christopher Luxon and Deputy Leader Nicola Willis have confirmed. 

There had been speculation the plan would include closing tax loopholes for churches and charities in order to fund tax cuts for income earners and landlords. 

This speculation was fuelled by Luxon and Willis refusing to confirm or deny such an idea. However, the Herald understands charities and churches will keep their current tax-exempt status. 

Instead, Willis said there would be “four additional revenue measures in our tax plan. They will be specific, they will be targeted”. 

National has confirmed it will look to update its most recent tax policy, which included a plan to raise income tax thresholds, which would have the effect of giving income earners a tax cut. 

It would also restore the ability of landlords to deduct interest costs from their tax bill, and take the bright line test back to two years. 

Labour has said the plan would require massive cuts, costing it at about $11b over the forecast period. 

That cost would require National to implement all of its tax changes in the first Budget after the election. It is more likely the cuts will be staggered, with income tax changes coming first, followed by the property ones. This would have the effect of reducing the cost of the plan. 

Willis said today the plan would be fully funded from reprioritisation and revenue measures, code for spending cuts and tax increases. 

National leader Christopher Luxon and deputy leader Nicola Willis during a walkabout in Tawa, Wellington. Photo / Mark Mitchell 

“That tax plan will include spending reprioritisations as well as targeted new revenue measures so that we can responsibly fund a package of income tax reduction focused on the squeezed middle who are doing it really tough,” Willis said. 

Likely coalition partner Act said it backed the idea of taxing churches and charities. 

“Taxpaying businesses are at a competitive disadvantage due to certain companies’ tax-free status and this destroys the principle of a competitive marketplace. As I have been calling for since 2016, it’s time to close the ‘charitable tax’ loophole,” Act Leader David Seymour said. 

“Britain amended this charitable tax loophole in the 1920s and New Zealand is long overdue to do the same. 

“Ngai Tahu businesses like Go Bus and Shotover Jet are tax-exempt due to the iwi’s charitable status. Even church-owned businesses like Sanitarium or Mission Estate Winery are exempt from company tax due to an archaic and outdated British law classing advancement of religion as a charitable purpose. 

“It’s not something that I’ve looked at in the last little while,” he said. 

As rumours swirled about the potential taxing of churches, Prime Minister Chris Hipkins was asked to weigh in on the idea. 

Hipkins refused to confirm or deny whether he agreed with the idea. 

“I think businesses, you know, I think the Sanitarium is the one that gets raised all of the time. I’m certainly open to looking more at that,” Hipkins said, citing the example of Sanitarium, which doesn’t pay company tax because of its owner’s charitable status. 

Hipkins had a crack at National for now deciding to raise revenue to pay for its tax plan. 

“The National Party have been criticising every revenue-generating measure that this Government has put in place - interesting that they’re now coming up with some of their own,” he said. 

Thomas Coughlan is deputy political editor of the New Zealand Herald, which he joined in 2021. He previously worked for Stuff and Newsroom in their Press Gallery offices in Wellington. He started in the Press Gallery in 2018.