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.