National is promising voters it will introduce no new taxes if re-elected in November, abandoning proposed bank and accommodation taxes. But the pledge comes with an important qualification: Finance spokesperson Nicola Willis would not rule out increases to existing taxes, levies or fees — while Christopher Luxon left open the future of fuel excise.
eLocal Report: Based on reporting by Tuwhenuaroa Natanahira, Political Reporter for RNZ.
National Draws Its Election Tax Line
National has made taxation a defining issue for the November election, promising that a re-elected National-led government would introduce “no new taxes.”
The commitment follows weeks of uncertainty after Prime Minister Christopher Luxon publicly discussed three potential revenue measures: an accommodation levy, a bank tax and an increase in fuel excise.
Two have now been taken off the table.
National had already ruled out the bank tax and has now abandoned an accommodation levy targeting short-term accommodation.
But the third — increasing fuel excise — has not been ruled out.
That distinction is important because National's promise is specifically “no new taxes,” rather than “no tax increases.”
Existing Taxes Could Still Rise
RNZ directly asked Finance spokesperson Nicola Willis whether National's commitment meant existing taxes, levies and fees would not increase.
She did not give that assurance.
“We're saying no new taxes.”
Luxon similarly defended the existing petrol-tax system, noting fuel excise has been part of New Zealand's road-funding model for decades.
He said the government had chosen not to increase it during its first term, while also acknowledging its role in funding roads.
That leaves National with considerable room inside its pledge.
An entirely new tax would be prohibited under the promise.
Increasing an existing tax or levy has not been ruled out.
Accommodation Levy Abandoned
National had considered introducing an accommodation levy as a way of helping councils meet infrastructure and other costs generated by tourism.
The proposal could have affected short-term accommodation including hotels, motels, bed and breakfasts and other visitor accommodation.
Luxon said National remained committed to solving the underlying tourism-funding problem but concluded an accommodation levy would also fall on ordinary New Zealanders travelling domestically.
“We couldn't find a way to do it through an accommodation levy, that would end up hurting everyday Kiwis who are just going away for a weekend in Auckland or Queenstown.”
Willis said National would instead investigate existing mechanisms for helping councils manage tourism-related costs.
That solves the political problem of introducing another tax.
It does not yet explain how the underlying council costs will ultimately be funded.
Bank Tax Also Dropped
National has also moved away from imposing additional taxation on banks.
At Budget 2026, Willis announced a bank levy expected to raise approximately $200 million over four years.
But after examining alternative mechanisms, she said National could not find one that would guarantee the additional cost would not ultimately be passed on to customers through mortgage costs or bank fees.
“I'm really concerned that Kiwis not face the cost of additional taxes.”
The decision illustrates the difficulty governments face when attempting to tax particular industries.
A tax may legally be imposed on a company.
Its economic cost can still ultimately be transferred to customers, shareholders, employees or suppliers.
Luxon Makes Tax the Election Battleground
Luxon says taxation will be a “defining theme” of the election.
He argues National's commitment reflects disciplined economic management based on economic growth, employment, higher wages and lower taxation.
“Our promise of no new taxes this election reflects our disciplined economic management, focused on growing the economy, creating jobs, lifting wages and keeping taxes low.”
National is contrasting that position with Labour's fiscal programme.
Luxon claimed Labour and its political allies could introduce as many as nine new or increased taxes, citing possibilities including capital gains, wealth, inheritance and gift taxes alongside higher income and business taxation.
Some of those claims concern policies or possibilities National attributes to Labour and associated parties rather than measures necessarily contained in Labour's current platform.
That distinction will matter as the campaign develops.
Labour Says Revenue Promise Means Cuts
Labour campaign chair Kieran McAnulty has attacked National's pledge from the opposite direction.
His argument is straightforward: if government rules out additional sources of revenue, spending must eventually be constrained.
“If you're ruling out revenue, you have to cut spending. So what are you going to cut?”
McAnulty pointed to nurses, hospital services, frontline workers and family support as areas voters should consider when assessing National's commitment.
He said voters deserved to know what National might remove or reduce to meet its fiscal objectives.
National rejects that framing and argues economic growth can improve government finances without imposing additional taxes.
Labour's 33 Percent Spending Target
The disagreement also exposes a wider difference over the size of government.
Labour's newly released fiscal strategy proposes holding Crown expenditure at approximately 33 percent of GDP.
Read RNZ's report on Labour's fiscal strategy HERE
Willis argues maintaining spending at that level will ultimately require additional taxation.
“A vote for Labour is a vote for more taxes.”
But spending as a percentage of GDP is influenced by both sides of the equation.
Government can reduce the ratio by limiting spending growth.
Alternatively, stronger economic growth can increase GDP and reduce expenditure's relative share without equivalent nominal spending cuts.
The competing parties are therefore offering voters different assumptions about how much economic growth can realistically contribute to balancing future budgets.
What Does “No New Taxes” Actually Mean?
This may become the central accountability question surrounding National's pledge.
There is an important difference between:
no new taxes
and
no higher taxes.
National has explicitly promised the first.
It has not promised the second.
Existing fuel excise could potentially increase without technically breaching a commitment not to create a new tax.
The same issue potentially applies to existing levies and fees.
For voters assessing household costs, however, the legal classification may matter considerably less than the amount ultimately leaving their bank account.
A $100 increase caused by a new tax and a $100 increase caused by a higher existing levy have the same effect on disposable income.
Coalition Agreement Could Lock In Pledge
Luxon was also questioned about whether National's position could survive coalition negotiations.
He said it would.
Asked whether the no-new-tax commitment would be solidified in any future coalition agreement, Luxon confirmed that was National's intention.
He pointed to the current coalition's agreement on income-tax relief as evidence that National, ACT and New Zealand First could reach common ground on taxation.
That creates a measurable post-election commitment.
If National leads the next government, voters will be able to compare any coalition agreement directly against the promise being made during the campaign.
The Revenue Question Remains
National's policy creates a political commitment.
It does not eliminate the underlying fiscal arithmetic.
Governments have essentially three broad ways of dealing with persistent gaps between expenditure and revenue:
increase revenue, reduce expenditure, or borrow.
Economic growth can improve the equation by generating additional tax revenue without increasing tax rates, but the effectiveness of that approach depends on the strength and composition of the economy.
National's argument is that growth and disciplined spending can provide the answer.
Labour argues that ruling out additional revenue inevitably creates pressure for further spending cuts.
The election debate should therefore move beyond whether either party prefers higher or lower taxation.
The more useful question is whether their numbers actually balance.
Does This Affect New Zealand?
Directly.
Tax policy affects household disposable income, business investment, government services and public debt.
But voters should pay particular attention to the precise wording of political commitments.
National is not promising that the amount New Zealanders pay through every existing tax, levy or government charge will remain unchanged.
It is promising not to introduce new taxes.
That is a narrower commitment.
The future of fuel excise provides the clearest immediate test.
National has specifically declined to rule out increasing it.
Current Relevance
The election campaign now gives voters an opportunity to demand greater precision from both major parties.
National should identify which existing taxes, levies and fees could potentially rise during the next term.
Labour should identify the additional revenue required to finance its proposed expenditure.
Both should provide enough detail for voters to compare the actual effect on households rather than simply competing slogans.
Long-Term Relevance
New Zealand's fiscal challenge extends beyond the November election.
An ageing population, healthcare costs, infrastructure investment, debt servicing and superannuation will continue putting pressure on government finances regardless of which party forms the next government.
That means promises about taxation cannot sensibly be assessed independently from expenditure.
If governments promise not to raise revenue, voters should know what happens to spending.
If governments promise increased spending, voters should know where the additional money comes from.
Historic Relevance
Tax promises have featured prominently in New Zealand elections for decades.
The political temptation is obvious.
Voters generally like lower taxes and better public services simultaneously.
Governments, however, ultimately have to reconcile the two.
National has now drawn a clear campaign line:
No new taxes.
But the equally important line remains unwritten:
How much could the taxes, levies and fees New Zealanders already pay increase?
That is the question voters should keep asking between now and election day.
Source
Tuwhenuaroa Natanahira — Political Reporter — RNZ
Read Tuwhenuaroa Natanahira's RNZ reporting HERE
Independent reporting. Original context. Credited sources.