The Government's appointed former Labour Finance Minister and architect of the NZ Super Fund and Kiwisaver Michael Cullen to head up the Tax Working Group.
This was announced Thursday by current Finance Minister Grant Robertson and Revenue Minister Stuart Nash as they released terms of reference for the group as part of one of the new Government's commitments in its 100 Day Plan.
No other members of the group have been announced yet. This is expected before Christmas.
Thursday's announcement said the Working Group should have its first meeting no later than February 2018, issue an interim report to the Minister of Finance and Minister of Revenue no later than September 2018, and issue a final report to the Minister of Finance and Minister of Revenue no later than February 2019. These dates may be varied with the consent of the Minister of Finance.
Joyce: It's a rubber stamp for CGT
National's Finance spokesperson Steven Joyce described the announcement as "an 18-month-long rubber stamp" for a Capital Gains Tax. "Its Terms of Reference is written so that it will propose one significant thing at the end of it, a Capital Gains Tax," he said. The appointment of Michael Cullen as chair meant there was "no pretence" of independence about the group. "Sir Michael is many things but a politically independent voice on taxation policy he is not."
The group is being asked to report on:
- Whether the tax system operates fairly in relation to taxpayers, income, assets and wealth
- Whether the tax system promotes the right balance between supporting the productive economy and the speculative economy
- Whether there are changes to the tax system which would make it more fair, balanced and efficient, and
- Whether there are other changes which would support the integrity of the income tax system, having regard to the interaction of the systems for taxing companies, trusts, and individuals.
Things the group won't look at include:
- Increasing any income tax rate or the rate of GST
- Inheritance tax
- Any other changes that would apply to the taxation of the family home or the land under it, and
- The adequacy of the personal tax system and its interaction with the transfer system (this will be considered as part of a separate review of Working for Families).
This was the announcement:
Finance Minister Grant Robertson and Revenue Minister Stuart Nash today announced the Terms of Reference for the Tax Working Group and that the Group will be chaired by Sir Michael Cullen.
“Our 100 Day Plan includes the establishment of a Tax Working Group. The Working Group will consider changes that would improve the structure, fairness and balance of the tax system,” says Grant Robertson.
“This Government is committed to a fair and progressive tax system. It is important that New Zealanders have confidence in their tax system and know that everyone is paying their fair share.”
“At the moment the tax system appears unfair – for example, it doesn’t treat income from speculation in housing as it does income from work. We want to consider how we can create a better balanced system and can encourage a shift to investment in the productive economy.
“Individual wage-earners, businesses, asset owners and speculators should pay their fair share of tax. Right now we don’t think that is happening. This working group is not about increasing income tax or the rate of GST, but rather introducing more fairness across all taxpayers.
“The Working Group will also consider how the tax system can contribute to positive environmental outcomes and the impact of likely changes to the economic environment, demographics, technology and employment practices over the next decade.
“As former Minister of Finance from 1999 to 2008, Sir Michael’s credentials are impeccable and he will be a huge asset to the Working Group.”
“The other members of the Working Group will be announced before Christmas. They will include a diverse range of tax and finance experts and representatives of the business and wider community. The Working Group will be supported by a secretariat of officials from Treasury and Inland Revenue and have an independent advisor to analyse the various sources of advice received,” says Stuart Nash.
“Final recommendations to Ministers are expected by February 2019. As promised before the election, any significant changes legislated for from the Group’s final report will not come into force until the 2021 tax year.
“It is important to ensure that all sectors of the New Zealand economy can feed into the Working Group’s processes and that all relevant perspectives are considered.”
“As we promised during the election campaign, certain areas will be outside the scope of the review, including increasing any income tax rate, the rate of GST, inheritance tax and changes that would apply to the family home or land beneath it,” Grant Robertson says.
“We also want to thank our government partners, the New Zealand First and Green parties, for their input and support of the Terms of Reference for this important piece of work on the future of our tax system.
”This review is a core part of the government’s programme and I’m confident it will deliver recommendations that will enable us to put in place a tax system that is fair for all New Zealanders,” says Grant Robertson.
This is the statement from National's Finance Spokesperson Steven Joyce:
The Government’s Tax Working Group announcement looks like an eighteen month long rubber stamp for a Capital Gains Tax, National Party Finance Spokesperson Steven Joyce says.
“Its Terms of Reference is written so that it will propose one significant thing at the end of it, a Capital Gains Tax,” Mr Joyce says.
“Yet Mr Robertson’s assertion on the current taxation of capital gains in the property market remains incorrect. People who buy and sell houses for a profit have those profits treated as income for tax purposes under the law today.
“So people can only assume once again that his unspoken desire is to introduce a Capital Gains Tax on farms and small businesses.”
Mr Joyce says there is also no pretence at the independence of the group with the appointment of former Labour Finance Minister Sir Michael Cullen as Chair.
“Sir Michael is many things but a politically independent voice on taxation policy he is not,” Mr Joyce says.
“Let’s face it - he was Labour’s last Finance Minister and one of the key coalition negotiators for the Labour Party.
“Nothing will come out of this group that Grant Robertson doesn’t want. And all he wants is a recommendation for a Capital Gains Tax.
“Mr Robertson would be better to dispense with the expense to taxpayers and write out his tax policy for the next election when the time comes in the normal manner.”