NZ Tax Reform Proposal Released
May 10, 2010 New Zealand Taxation
A new report has been released proposing a raft of changes to the New Zealand tax system, suggesting heavy cuts to many forms of taxation, and significant decreases to Government spending. The report is accompanied by a national survey profiling New Zealander’s acceptance of possible changes to taxation.
On May 10th the Maxim Institute released Lifting the Bucket: Tax policy and economic growth, a report detailing the Institute’s proposed changes to the New Zealand economy. The report was accompanied by the results of a survey profiling national tax payer’s opinions regarding taxation levels and Government spending on public projects. According to the releases, the New Zealand tax system is overly-reliant on taxes that are harmful to growth, and New Zealanders are unwilling to institute changes if they result in reductions in public projects and Government spending.
Among its many proposals the report revolves around a series of key changes. Primary alterations include lowering corporate and trust tax rates to 27 percent. The personal income tax structure would be altered to a two tier system with a starting rate of 10 percent and a top rate of 27 percent, with a top-band earnings threshold of NZD 27 000. Goods and Service Tax (GST) would be increased to 15 percent, and Government spending would be limited to 30 percent of national GDP. Justifying the changes the report stated “We need to move toward a system that relies more on consumption taxes, like GST, and less on income and corporate taxes, so that the tax system is more growth-friendly on the whole.”
According to the results of the survey accompanying the report, the majority of New Zealanders are opposed to the types of changes recommended by the Maxim Institute. The suggestion of reducing Government spending with reductions in Working for Families, KiwiSaver, interest free student loans, “20 Hours Free” early childhood education and New Zealand Superannuation was met with the most opposition among those surveyed. Similarly, GST increases and land taxes were not supported, even if they are counterbalanced with decreased personal taxes. The Maxim Institute claimed that the spending should be addressed and rebalanced to restore efficiency and cut wasteful expenditures.
Photo by Casey Serin