The Tax Working Group has concluded that it's just too hard to stop tax avoidance by the rich. Their solution is the tax equivalent of allowing doping in sport
There's a lot to recommend the Tax Working Group's 70-odd page report released last week, but for poor New Zealanders it represents another kick in the nethers at a time of rising unemployment.
The report kicked off what will be one of the biggest political debates of the year – what to do about our taxes.
This is the start of my post at tvnz.co.nz. To continue reading, click here. But feel free to add comments and debate below.
Comments (3)
Well, apart from the GST change - which will futher depress the local economy in addition to the massive transition cost - I thought the suggestions were better than they might be. The long overdue taxation of investment properties will be a positive change, especially if it excludes new building capital gains, which would work to increase our flat and aging supply.
The change in the top rate doesn't make much difference because none of them pay it. In fact commercial tax payments are closer to 12% all up than the 33% which is to be the official figure.
It would seem that there is considerable room for expanding the number of IRD investigators, and perhaps something along the lines of Australia's celebrity tax evasion task force.
Yet there is a great deal of inefficiency in New Zealand. Korea has a social welfare system, and a public health system of 1st world quality. And they pay 10% tax. NZ should be seeking parity with world top performers on public service provision - which are never either the US or the UK.
At net taxes of 48%, we should receive free tertiary education with hot and cold running social services and free annual tropical holidays - but instead we have Rodney Hide & Allan Bollard trying to recreate Stalag 13. You're a fool if you stay in NZ and pay tribute to these despots.
Bah. You're confusing "has an income in the top tax bracket" with "being rich", and they're not necessarily the same thing. Sure, having an income in the top tax bracket makes you more likely to be well off, but it's entirely possible to be rich and not have that type or volume of income. Owning several rental properties is probably the example du jour of being rich, while quite possibly having little or no normal taxable income.
Also, you need to read the definition of the word "cheat". To say that people who structure their tax affairs to their advantage within the law are cheats is an unfair accusation. To extend your sporting analogy, it's like saying runners who use shoes are cheating because it gives them an advantage - albeit one that's entirely within the rules.
Don't buy the shoe analogy, Richard. Sure, the law allows some avoidance, but it also makes it quite clear that if you earn X you should pay Y; eg over $70k the rule is that you pay 38c. There's no equivalent rule in athletics telling runners not to wear shoes, nor is there an equivalent of the IRD and its work looking at the line between legal avoidance and something else.
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