New Zealand Tax Reform Ideas Released

November 30, 2009 New Zealand FinanceNew Zealand Taxation

BeehiveThe 2025 Taskforce published its report to the New Zealand Government on November 30th, suggesting a number of taxation and government spending changes it believes are necessary in order for the country to close any incomes gaps with Australia.

Key suggestions brought forward by the 2025 Taskforce report include lowering the current top tax rate of 38% and the corporate tax rate of 30% to 20%. If suggestions in the report are followed, Government spending in 2012 and 2013 will be reduced to 29% of GDP, from its current estimated 37%. In an effort to materially reduce the Crown’s operating expenses, a medium-term target will be set and the Minister of Finance will be required to publicly report what steps are taken to achieve this goal. Welfare reform should be undertaken to reduce the number of working age individuals who are currently receiving government benefits. Kiwisaver subsidies should be abolished and the eligibility age of New Zealand Superannuation should be increased progressively. Road congestion charges should be introduced, in order to fund road development. Early childhood education has been recommended to lose its government subsidies and tertiary student-loans are to be charged interest again.

John Key, New Zealand Prime Minister, displayed skepticism regarding the report, even before its publication. Specifically, he voiced concerns regarding some of the suggestions acting directly against promises made by the National Party during their election campaign. He said “It’s not to say we can’t pick our way through the report and find something that might add to New Zealand’s economic performance, but where we specifically campaigned on something I’m not going to break my word”.

Photo by tony_the_bald_eagle