The Government has been quick off the bat to allay fears the release of the Tax Working Group’s (TWG) report would spark a major overhaul of the tax system.
It said, in the opening line of the press release it sent out on the report, that it would respond to it in a “measured” way, and that it was “highly unlikely” all the recommendations would be implemented.
Finance Minister Grant Robertson expanded on this comment when talking to media, saying: “Given the breadth of the recommendations that are here, it is unlikely that all of them will be able to be implemented.
"I’m not picking out a specific part of that at this point, it’s just clear when you’ve got a report of this nature, that covers this much ground, it’s unlikely that will happen.”
Revenue Minister Stuart Nash went on to say: “The overall findings confirm that there is no need for a major overhaul of the system.
“Our response will preserve the key principles of our existing broad-based low-rate tax system. In the words of the Prime Minister, we will not throw the baby out with the bathwater.”
However, asked whether Nash and Robertson were brave enough to implement changes they were spooked by in the last election, Robertson said, “I don’t get spooked that easily.”
While Labour and the Greens have in the past been supportive of a capital gains tax, NZ First has opposed it.
The Greens in a statement on the report reiterated that it had "long-held" policies of taxing income from capital more fairly and a greater use of ecological taxes.
"It is great to see the Tax Working Group’s Report focus on both of these issues,” it said.
NZ First didn't release a statement. When pressed by media on the Party's position on extending the taxation of capital, Leader Winston Peters was resolute he was going to "stick to the script".
“We’re going to read the report, take serious advice on what tax experts and others think of that, and more importantly, consult the business and working end of town. And when we’ve known what the people have said, we’ll make a decision by the end of April," he said.
Quizzed on comments he reportedly made this week, assuring farmers they wouldn't be affected by a capital gains tax, Peters said: “I can reassure the farming community and regional New Zealand that we’re not going to have them panicked by the media with rumour and malice… We’re going to ensure that they get their voice heard…”
Robertson made it clear he wouldn’t rule in or out carving out exemptions for agriculture.
He said NZ First was engaging “very constructively” as the three parties that form the government seek consensus on how to move forward.
He said the Government had had “preliminary discussions at a political level” with Peters on the report.
“They’ve been very very general at a level of principle. Now we’re in a position to work through the detail.”
Robertson stressed the Government would honour the terms of the Coalition Agreement as it considered how to translate some of the TWG's findings into legislation.
Robertson didn't commit to providing more funding for the Inland Revenue, despite the TWG raising the following concerns:
"If the Government decides to proceed, it is crucial that Inland Revenue is fully resourced and has the capability to develop and implement the new tax. The policy and legislative processes must also include thorough consultation with a diverse range of voices, using both formal and informal channels.
"The Group also notes that the Government’s stated timeframes for implementing tax reform will be challenging. The Government will need to ensure additional resources are available for implementation if these timeframes are to be achieved."
The Government will report back in full on the TWG’s findings in April.
It had committed to passing legislation to implement policy changes arising from the report before the end of the Parliamentary term. However no policy measures will come into force until April 1 2021, meaning people will be able to vote on any decisions the Government makes on tax.