Let’s hope the Tax Working Group’s report out today is more worthwhile than the effort of the 2025 Taskforce.
The basic idea that has emerged from the interim reports is that we should try to take tax off income and put it on land. If you tax stuff that can”t moved out of the country, rather than stuff that can be you’ll have less negative effect on the economy from taxation.
Of course, John Key has already ruled out a capital gains tax, and he doesn’t seem too keen on a land tax. So, closing the tax loopholes may be the only open avenue.
What taxation to put on land is only half the story. The other half is how income tax is cut. Will it be just a big tax cut for the rich or a smaller one for everyone? There is no reason that any changes should be in the form of cutting the top rates, which benefits hardly anyone, only those who are already well-off. A tax-free bracket on income tax is the best and fairest way to distribute revenue from new property taxes.
To be credible, the report will have to show who will pay more tax and who less as a result of the changes it proposes. If it just cuts taxes for the rich it will amount to a covert transfer of wealth from working Kiwis to the rich and that will be a disgrace.