The Tax Working Group established by the Labour-led Government has published its initial report.
The working group is chaired by Sir Michael Cullen and its 10 members include four lawyers. The working group’s remit is to look at the structure, fairness and balance of New Zealand’s tax system.
The report says extending the taxation of capital income would have some advantages including improving the fairness and integrity of the tax system, and levelling the playing field between different types of investments.
“It will provide an increasing source of revenue over time; depending on design, it will also enhance the sustainability of the tax system (particularly if the difference between the company rate and the top personal rate increases in the future).”
But the report also notes that extending the taxation of capital income will also increase administration and compliance costs, and could lead to some reduction in the overall level of saving and investment in the economy.
The working group has considered changes to protect the country’s environment.
“The environmental challenges we face require profound change to the pattern of economic activity. It is necessary for policy-makers to think in terms of systems change – and to develop a set of goals and principles that can guide a transition, over many decades, to a more sustainable economy. Taxation is one tool – alongside regulation and spending measures – that can be used to support and guide this transition,” the report says.
The Government has been clear that no changes will be implemented this term and that there are key bottom lines – to the family home, increases to income tax and GST, while an inheritance tax is off limits.
Submissions are open until 1 November 2018 and more information can be found at https://taxworkinggroup.govt.nz/
The four members of the legal profession on the Tax Working Group are:
Professor Craig Elliffe who teaches taxation at the University of Auckland’s Law Faculty.
Joanne Hodge, a former tax partner at Bell Gully.
Nick Malarao, a partner at Meredith Connell who specialises in tax, company law, civil enforcement and litigation.
Michelle Redington, an in-house lawyer and head of Group Taxation and Insurance at Air New Zealand.