Few surprises in tax working group

The members of the tax working group charged with reviewing the fairness, structure and balance of New Zealand’s tax system are a broad mix.

The first meeting of the group is scheduled for late January and yesterday Finance Minister Grant Robertson and Revenue Minister Stuart Nash announced members of the group which will be chaired by former finance minister Sir Michael Cullen.

Least surprising among those named is Auckland University professor Craig Elliffe who has been advising Labour on tax issues and is a strong proponent of a capital gains tax.

Labour has indicated it could change its mind on promoting a capital gains tax provided the family home is excluded. The government campaigned instead on establishing the working group, having dropped its policy favouring a capital gains tax to deal with massive gains in house prices after former leader Andrew Little judged it was part of the reason for Labour's losses at both the 2011 and 2014 elections.

The other foregone inclusion in the group was Bill Rosenberg, economist and director of policy at the Council of Trade Unions. Other well-known tax experts include Joanne Hodge, former tax partner at Bell Gully; Nick Malarao, a senior partner at Meredith Connell; Geof Nightingale, a partner at PwC New Zealand; and Robin Oliver, former deputy commissioner at Inland Revenue. The last has previously stated his opposition to a capital gains tax.

Business interests are represented by Kirk Hope, chief executive of Business New Zealand and Michelle Redington, head of group taxation and insurance at Air New Zealand.

Hinerangi Raumati, chair of Parininihi ki Waitotara and Marjan Van Den Belt, assistant vice chancellor (sustainability) at Victoria University of Wellington round out the group.

While stopping short of being stacked in the Coalition government’s favour, the group appears likely to produce more palatable recommendations to it than the previous Rob McLeod-led tax working group whose recommendations didn’t go down that well with Labour at the time.

Labour is likely to want the group to recommend something that is a little further to the right than the Coalition government would want, so it can tweak it back slightly, and then sell to voters in the next general election.

Although introducing a capital gains tax has been a high hurdle for New Zealand voters to jump over in the past, the timing now seems better than it has ever been for that to happen.

For the government’s part Mr Nash said yesterday the team was well-placed to meet its task of making “our tax system fairer for all.”

In November, Mr Robertson announced the terms of reference for the group, which will come up with an interim report by September 2018 and a final report by February 2019. That will then be used to inform the government's policy direction at the next general election.

It will report on whether the tax system operates fairly in relation to taxpayers, income, assets and wealth; whether it promotes the right balance between supporting the productive economy and the speculative economy; whether there are changes that would make it fairer, balanced and efficient, and whether there are other changes that would support the integrity of the income tax system, having regard to the interaction of the systems for taxing companies, trusts, and individuals.

Increasing the income tax rate or the rate of GST, an inheritance tax and any changes that would apply to the taxation of the family home or land under it are outside of its scope.

(Additional reporting BusinessDesk)