Tax Working Group
Tax Working Group

BusinessMarch 29, 2018

The people deciding the future of tax in NZ

Tax Working Group
Tax Working Group

The Spinoff Cheat Sheet: a clickable, shareable, bite-sized FAQ on the news of the moment. Today, what is the Tax Working Group anyway – and what is it up to?

The Spinoff is hosting Tax Heroes – a series covering tax, who pays it and what it means. Click here to read more.

Before all those wannabe inquiries, working groups and advisory panels there was the Tax Working Group.

Former Labour leader Andrew Little was talking about a Tax Working Group way back in 2016, and the now-government went into the election pledging to set one up.

Now, it is asking us what we think about tax and posing some questions; what does the future of tax look like, what is the purpose of tax (to get revenue or to change behaviour, for example) and are we taxing the right things?

But why do we need one?

There’s some concern our tax system just isn’t as good as it can be, or as fair as it could be. While New Zealand is regarded as having a largely uncomplicated tax system, Labour says the TWG will “ensure that there is a better and fairer balance between the taxation of income and assets, in particular the capital gain associated with property speculation”.

So they’re coming for the houses, huh.

Well, that’s pretty much what former minister Steven Joyce said, reportedly calling the group “an 18-month-long rubber stamp” for a capital gains tax. The Tax Working Group would likely say they’re open minded about what recommendations they may make, but also group chairman Sir Michael Cullen has said a wealth tax (of some sort) may be on the table.

Then there is this rather large smoking gun – one of the group’s key questions is whether tax can make housing more affordable. Oh, and there’s this quote from Finance Minister Grant Robertson: “At the moment the tax system appears unfair – for example, it doesn’t treat income from speculation in housing as it does income from work. We want to consider how we can create a better balanced system and can encourage a shift to investment in the productive economy.”

Any other taxes on the cards?

Cullen has floated environmental taxes, land taxes and taxes on financial transactions as being of interest. But in terms of rising the amount of tax collected, its political masters say it’s not about that – but rather, about fairness. Cullen is on record as saying perhaps if we cranked up tax on some things, like pollution, we could lower another tax like GST. The group has an objective of a “sustainable revenue base”, currently about 30% of GDP.

So now what?

Public submissions are currently open, closing on April 30 before an interim report will be issued in September, with final recommendations coming through in February next year.

I’ve got to ask. How much is this costing?

A cool 4 million bucks.

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