Government Groups Calling for Tax Overhaul

December 2, 2009 New Zealand FinanceNew Zealand Taxation

Flat Stanley comes to the BeehiveWithin days of the 2025 Taskforce releasing their report to the New Zealand Government and the Tax Working Group’s conference, intense debate has arisen around the changes that need to be made in New Zealand’s taxation system, bringing into question set goals and the methods behind them.

Amid a global financial crisis and worldwide climate of tax changes, the New Zealand Government has created two research groups with the common goal of improving the country’s financial standing. The 2025 Taskforce was charged with forming a framework proposal to close the income gap between Australia and New Zealand. It’s report was released on November 30th.

The Tax Working Group was instate to address New Zealand’s key medium-term taxation challenges. As a precursor to its final report, the group held a conference on December 1st, to discussing. The final report submission is expected in early 2010. Both groups have advised the Government to enact radical and sweeping changes to New Zealand’s tax system.

The 2025 Taskforce’s framework for economic reform includes lowering top-end personal and corporate taxation to between 20% and 25% and not instating a capital gains tax. It extends to abolishing certain universal benefits, Kiwisaver subsidies and the New Zealand Superannuation fund, along with selling state assets like TVNZ, Genesis Energy, Mighty River Power and Meridian Energy. The ideas were refused by John Key, New Zealand Prime Minister, the day before the reports release. Bill English, New Zealand Finance Minister, stated on the day following the report that there will be no “big bang” changes to the next New Zealand Budget.

Although the Tax Working Group has not officially stated their recommendations to the New Zealand Government, comments to the media and released summary papers give an indication of think tank’s intentions. Bob Buckle, Chairman of the Tax Working group, recently provided a summary, saying “We’ve looked at capital gains tax, we’ve looked at more targeted schemes for dealing with investment in property. We have looked at the pros and cons of lifting the GST rate and at some of the ways in which we treat depreciation on buildings”, in the same interview he revealed that the group had investigated land taxes too”.

Photo by nznationalparty