The blog enlightened readers about our Government giving us, Joe Public, the opportunity to have our say about the New Zealand tax system.
If you don’t remember the blog, you may remember the hard-hitting Bill Murray quote:
“The best way to teach your kids about taxes is by eating 30 per cent of their ice cream.”
Just to recap, T identified five key questions about our tax system that we all need to think about for the future.
In a nutshell, they asked, “Are we taxing the right things?”
New Zealanders were then given the opportunity to express their views online.
This week, The Tax Working Group published its
So, are our metaphorical ice creams going to get smaller or are we going to get a bonus double scoop?
Below is a summary of the main suggestions put forward in the report.
Capital Gains tax – will they, won’t they?
Back to that old chestnut.
Although the economy has maintained steady growth over recent years, New Zealand is lagging behind other developed countries when it comes to productivity.
And there is an undeniable link between the economy and the property market.
While the report identifies demand for property as the main driver for house price rises, the lack of a capital gains tax is also seen as a contributing factor.
Inevitably, investors are putting their money into property rather than investing in research and development.
Thus, in turn, holding back New Zealand productivity.
Although the group is not recommending the introduction of wealth taxes or land taxes, they suggest something needs to change.
The interim eport sets out two potential options for extending capital income taxation:
1. To tax gains on assets that are not already taxed.
2. To tax deemed returns from certain assets.
In layman’s terms, bringing in a capital gains tax.
Both options are still being investigated.
The interim report also focuses on ways we can use taxation to keep New Zealand clean and pristine as well as meeting our global environmental obligations.
The cost of running a car in Aotearoa is already eye-wateringly expensive, but the report suggests it could become even more costly.
One of the proposals in the report includes advancing the use of congestion charging.
Other environmentally friendly suggestions include expanding the Waste Disposal Levy and strengthening the Emissions Trading Scheme.
No reduction in GST has been suggested in the report.
But if you have ever been a little lax when submitting your tax return or paying your taxes, then beware.
Things could be getting stricter.
In order to make the system more efficient, increasing penalties for non-compliance could be on the horizon.
There are also recommendations for a single Crown debt collection agency to ensure all debtors are treated equally and a taxpayer advocate service to assist small businesses in disputes with Inland Revenue.
The final report
This interim report only contains suggestions and further consultation will happen before the final report is published in February 2019.
BUSINESS buddy will continue to update you on all the developments, however if you have any questions regarding any of the topics in the report, feel free to contact us on 0800 283 399.