Tax Working Group Report a Good Start to Making New Zealand a Fairer Place

20 SEP | 2018

The Salvation Army believes that the Tax Working Group’s Interim Report is on the right track for reducing inequality and making New Zealand a more prosperous society.

The Interim Report released today indicates that the Working Group is looking seriously at the comprehensive taxation of capital income and at various environmental taxes. ‘If as a country we finally introduce capital and environmental taxes we may begin to address the rising wealth inequalities within our economy, as well as our quite wasteful use of resources such as water,’ says Lt-Colonel Ian Hutson – the Director of The Salvation Army’s Social Policy and Parliamentary Unit.

‘The proposal to look at taxing capital income addresses a serious gap in our current tax system. This gap has placed an unnecessary and unfair tax burden on poorer households and especially the working poor who presently pay income tax on every dollar they earn,’ says Lt-Colonel Hutson.

The Salvation Army agrees with the focus on taxing deemed capital income as the fairest approach to taxing wealth as this approach encourages the wise use of wealth and does not unduly penalise those people who turn their wealth to productive uses. The Army accepts that introducing a comprehensive system of capital income taxation will take time and resources, but believes that this is a necessary long-term investment in our tax system to make it fairer and more productive.

The Salvation Army also supports the Working Group’s interim findings around GST and in particular its decision not to get into the messy business of allowing exemptions. ‘The Army appreciates that GST is a regressive tax which hurts the poorest people and households the most, but GST is comprehensive, straightforward and works well at raising tax revenue to fund public services’ Lt-Colonel Hutson says.

‘We believe the poorest New Zealanders can best be helped by reducing income taxes on the lowest paid and through making income support programmes like Working for Families and working age welfare benefits more generous’ he adds.

However, the Working Group’s apparent ambivalence toward increasing excise duties on alcohol is disappointing, says Lt-Colonel Hutson.

‘Alcohol in New Zealand is lightly taxed in comparison with Australia and we know that the availability of cheap alcohol contributes to our booze culture and to problem drinking. We hope the final recommendations of the Working Group include definite proposals to raise excise duties on alcohol as a way of reducing alcohol related harm.’

‘The tax system is a vital part of our Government and wider New Zealand society and it is important that it aligns with our ambitions and concerns as a nation.’ Lt-Colonel says. ‘For this reason The Salvation Army believes that as a country we should be both courageous and fair-minded as we consider our tax future because with the right changes we can bring about a fairer and more prosperous society’.

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