Jacinda Ardern’s ruling Labour Party said it would raise taxes for top income earners if it is returned to power in New Zealand ’s elections next month, as the government looks to pay off debt accumulated due to its Covid-19 pandemic response. Ardern’s Labour Party, comfortably ahead in the election contest according to opinion polls, said it plans a new higher tax rate of 39 per cent for people earning over NZ$180,000 (US$118,908), which would only affect 2 per cent of New Zealanders. “Our plan strikes a balance as we recover from Covid-19,” Finance Minister Grant Robertson said in Wellington. New Zealand PM begin re-election campaign after successful coronavirus response The new policy is forecast to generate annual revenue of NZ$550 million (US$365 million), he said. It still puts New Zealand at the bottom third of income tax rates within OECD countries, and Robertson said the tax is lower than neighbouring Australia which has a tax rate of 47 per cent for income above A$180,000 (US$130,000), including a 2 per cent Medicare levy. The highest tax rate in New Zealand is currently 33 per cent for income over NZ$70,000 (US$46,000). Ardern, who leads a centre-left coalition government, is riding a wave of popularity after successfully limiting the spread of Covid-19, and is predicted to win a second term in the October 17 election. But economic challenges loom as the virus restrictions brought the economy to a grinding halt. New Zealand party fraud probes raise questions over Chinese funding “No country in the world has ever taxed itself out of recession, but Labour’s first instinct is to raise your taxes,” said opposition National Party spokesman Paul Goldsmith. The government earmarked NZ$62 billion (US$41 billion) for its Covid-19 response plan, and has spent billions on wage subsidy schemes and other measures to protect jobs. Ardern defended the new tax saying it was needed to ensure the government could continue funding health and education projects. “This is the totality of our tax policy,” Ardern said during a campaigning trip to Whakatane, adding the party will not make any further tax increases next term.