Creation of tax principles and reporting standards proposed

Revenue Minister David Parker has proposed the creation of tax principles and reporting standards to create a fairer tax system.

Parker made the announcement at a recent forum hosted by the Child Poverty Action Group, Victoria University’s Institute for Governance, and Policy Studies and Tax Justice Aotearoa.

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Parker hoped for a public consultation on what the country’s tax principles should be, and how government officials should report on the tax system’s performance in relation to these principles, to start mid-2022, interest.co.nz reported.

The revenue minister suggested high-level principles to be set in legislation, requiring tax officials to report information relevant to those principles, and the government to release a “guiding statement setting out its view on the development of tax policy.”

Parker hoped for this legislation to be passed before the current parliamentary term ends. 

He stressed the government has “no secret plan” and isn’t working on introducing new taxes.

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Parker also provided an update on Inland Revenue’s ongoing work to collect data on the amount of tax the wealthiest Kiwis are paying. He said the research was being done because the financial affairs of the wealthiest taxpayers weren’t fully captured by Statistic New Zealand’s Household Economic Survey, interest.co.nz reported.

“We have virtually no idea what rate of tax is paid by the very wealthy,” he said.

Parker said Inland Revenue was also tasked to collect information on how much GST people in differing income and wealth groups are paying.  

“I support our GST system, but it is regressive,” Parker said. “While not all taxes need to be progressive, the system overall should be. We can’t properly assess our tax system without knowing what effective GST rates are for different cohorts in New Zealand.”

Parker said the research “is about improving the evidence base about how the current tax system actually operates,” to “inform future tax policy advice and so it may feed into future tax policy development,” interest.co.nz reported.