Govt 'carefully considering' radical tax report
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Updated 3:15 PM Wednesday Jan 20, 2010

Finance Minister Bill English says he will be "carefully considering" advice to raise GST and cut personal income tax rates as he puts together his Budget.

English and Revenue Minister Peter Dunne have this afternoon issued a press statement, saying they will "carefully consider" advice from the tax working group, which says major tax reforms are needed.

"For ordinary New Zealanders, we're particularly keen to ensure that our tax system rewards effort, encourages savings and helps families to get ahead," said English.

Any changes would have to meet tests of equity and fairness, alongside delivering benefits for households and the economy, he said. "And given that we face another six years of Budget deficits, they need to be broadly fiscally neutral."

The group's report - one of several reviews to have reported back to the Government in recent months - will be considered in coming months as part of Budget decision making, said English.

Peter Dunne said the group had produced a comprehensive report and, in the process, it had helped generate constructive public debate.

"I note the Working Group's concerns regarding the misalignment of tax rates which encourages the use of trusts and companies, with a tax rate of 33 per cent and 30 per cent respectively, to shelter income that would otherwise be taxed at the higher personal tax rate of 38 per cent," he said.

The group says "significant changes" are needed to make New Zealand's tax system fairer and more effective.

More here.