National’s blind spots on tax reform

This week, the Victoria University Business School hosted renowned international tax expert, Dr Alan J. Auerbach.

He contrasted the work and findings of our own recent Tax Working Group with the findings of the UK Mirrlees Tax Review, and the Australian Henry Tax Review.

While he saw many positive parallels with the three reviews, he also highlighted three glaring problems with the parameters set by the National Government for New Zealand’s Tax Working Group (TWG).

1. Failure to consider a capital gains tax: Auerbach argued repeatedly that the failure to consider a capital gains tax distorted the work of the Group meaning “tax alignment” (setting the top personal, company, trust and PIE rates at 30%) became a bigger issue than it should have been.

2. Failure to consider ecological taxes: Given that environmental issues are driving many of the biggest challenges we face, Auerbach questioned why eco-taxes weren’t part of our wider tax review. The Mirrlees report devoted three chapters to environmental taxes as “taxes are among the most important economic instruments available to deal efficiently with pollution and thereby help protect the environment.”

3. Ignoring record growth in inequality: Auerbach highlighted our record growth in income inequality and how our tax review failed to consider wealth transfer taxes in this light. As a result income inequality has continued to grow unabated under National’s economic direction.

We’ve been proposing practical tax reform measures that would begin to address these three issues. You can read more about them here, here, and here.

Frog

 

7 thoughts on “National’s blind spots on tax reform

  1. The Green’s Taxation and Monetary Policy has strong points, sounds v.good.

    I’m look forward to the detail, but publishing premature detail with oversights is clearly not an option.

    Well detailed “shadow-budgets” surely require their own healthy budget for professional researchers and advisers. Trusting the next election results will make these resources a reality.

    Making financal policy a strength will put the Greens well placed to negotiate after the election.

    Best wishes to our hard working team. We’re come a long way!

  2. The Green’s Taxation and Monetary Policy has strong points, sounds v.good. I’m looking forward to the detail, though premature detail with oversights is clearly not an option.

    Well detailed “shadow-budgets” surely require their own healthy budget for expert researcher and advisers. Trusting our results at the next election will make these resources a reality.

    Making financal policy our strength will sure have the Greens well placed to negotiate after the election.

    Best wishes to our hard working team! We’re getting there.

  3. Time Norman put the rubber to the road.

    We’ve had years of tired rhetoric. If he’s serious about governing, then let’s see the numbers.

  4. Frog, that’s laughable.

    A read of the report of the TWG would show that about 5% of the report in chief comprised analysis of CGT. That can hardly be counted as “Failure to consider a capital gains tax”. If the complaint was “failure to implement a CGT” then that would be accurate, but that isn’t what is said.

    I’m now studying the Mirrlees review…

  5. I made this comment in Jan Logies posting about increasing welfare payments.

    Your solution lies close to hand.

    Russel Norman as wanna be finance minister in the 2014 Labour/Green government will write a 2013 shadow budget, in which will be provisions for revenue collecting and distribution to pay out more welfare.

    So look no further then the Greens 2013 shadow budget, for all will be revealed.

    What taxes will raise, what expenditure will be cut and what welfare will be increased.

    Surely there will be a 2013 shadow budget from the Greens, No?

    For how can Russel Normans’ quest to be finance minister be taken seriously if he does not produce a shadow budget?

    How can he negotiate with Labour for finance minister, when David Parker will certainly produce a shadow budget?

    What bargaining position will he be in without a shadow budget?

    None at all I would say.

    Or is the Russel Norman idea of finance minister already a dead duck?

    Surely it is time the Greens published a shadow budget? Just simply calling for taxation “reform” is not enough.

    Show which taxes will be raised, how much will be spent, what measureable benefits will be produced, etc.

    Stop dreaming about taking $4.5 billion out of the economy through a CGT and redistributing it.

    That is about as honest as the current National and previous Labour government budgets.

  6. He can’t be much of an expert if he thinks the Tax Working Group failed to consider Capital Gains Tax.

    Their report included –
    – the pros and cons of a various types of capital gains tax
    – estimated likely amounts that would be collected under various scenarios
    – listed the various ways NZ currently collects capital gains tax on property, shares, international investments, intellectual property etc
    – what types of gains could be taxed
    – and a list of other key elements that needed to be considered for a capital gains tax.

    Your number 1 bullet point “1. Failure to consider a capital gains tax: ”
    is obviously a load of made up nonsense.

    Was that through sheer ignorance, or to be deliberately misleading?

  7. practical tax reform measures

    It’s always about TAX, TAX and yet more TAX! Never once has a politician or one of these imported experts advised to reduce the total tax take. That’s because they have a vested interest in remaining on the political treadmill, bugger who is actually paying.

    Your party in your view might be doing God’s work requiring real tax paying stiffs, ie those working, not being indulgent on a benefit, to pay for ill-perceived environmental sins. Meanwhile the next party in line has their wheels that need oiling with yet more tax.

    One day a principled party will stand, saying enough is enough, work within the cloth you’ve got and actively work to reduce the total tax take.

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