A drop in household income from rising bank interest rates further demonstrates the need for an excess profits tax, the Green Party says.
“The main takeaway from RBNZ’s report is that rising interest rates will make it harder for people to pay the bills - all while boosting bank profits. The Government needs to step in and tax excess corporate profit and use the money to provide vital support for struggling families,” says the Green Party’s finance spokesperson, Julie Anne Genter.
The Reserve Bank’s latest Financial Stability Report states that households will “come under stress from the rising interest rate environment.” RBNZ estimates that the amount people have to spend servicing debt - whether paying back their own mortgage or paying back their landlords’ through rent - will more than double.
“Tens of thousands of people will be looking at their mortgage payments, rent, and everyday costs going up and rightly wonder how it is that banks can increase their profits while they themselves struggle.
“The reason is simple: while higher interest rates make it harder for people to pay the bills, they bring in more money for the banks.
“In other words, money that people need to make ends meet, essentially ends up in the pockets of bank executives and shareholders. The very same people who will benefit most from the National Party’s tax.
“Banks themselves did nothing to bring about this golden age of profit. They are simply cashing in on a change in economic conditions brought about by the war in Ukraine, inflation, and the global pandemic stimulus.
“The Green Party position on this is clear: if banks can make super profits from a change in circumstances that affects us all then those benefits should be shared.
“The simplest way for the Government to do this is to introduce an excess profits tax to ensure banks - and other large corporations profiteering from high inflation - are taxed fairly and the money used to support people to make ends meet,” says Julie Anne Genter.
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