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Heading into the general election next month, New Zealand (NZ) ruling Labour party pledges to raise the tax rate if re-elected to reduce mounting debt in the wake of COVID-19.

Finance Minister Grant Robertson announced a new top rate of 39% tax for income earned over $180,000 as part of the party’s long-awaited tax policy. Current top tax rate is 33% for income earned over $70,000.

Prime Minister (PM) Jacinda Ardern noted: “The policy would rake in around $500 million a year.”

“What this policy it assures that we will not have harsh cuts to health and education and we can keep a lid on debt. That’s something we need to give people certainty over,” she added.

Market reaction

NZD/USD looks to extend its recovery momentum above 0.6600 on the above news. The spot fell on Tuesday on reports that RBNZ is preparing plans for taking interest rates negative to support its recession-hit economy.

The kiwi, currently, trades 0.09% higher at 0.6623.