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<\/p>\nA visiting tax expert has lavished praise on a key revenue raiser in the New Zealand tax system, saying it is world-leading.<\/p>\n
Professor Michael Keen is a former head of tax policy for the International Monetary Fund, and was in New Zealand as a guest of the Tax Policy Charitable Trust.<\/p>\n
He said that good tax policy is based on a few key principles, including efficiency, fairness, and simplicity. <\/p>\n
On these grounds, Keen lauded New Zealand\u2019s system of GST, which is applied as a 15% tax on top of the price of the vast majority of goods and services. <\/p>\n
<\/p>\n
\u201cNew Zealand has a great GST. People seem here to accept that taxing consumption is a fair thing to do, and tax all consumption at pretty much the same rate,\u201d said Keen.<\/p>\n
In many European countries, taxes similar to GST are described as VATs \u2013 Value Added Taxes. <\/p>\n
Keen said New Zealand\u2019s GST rate is actually lower than that of many countries that set their VATs, but GST brings in relatively higher rates of revenue because it gets applied across the board. <\/p>\n
\u201cWhen I say great, it\u2019s because it has a very broad base. When we look around the world, and we say which country has the broadest VAT base, it\u2019s basically New Zealand.\u201d<\/p>\n
He said: \u201cWhich means you get a lot of money from a rate that by some European standards is a modest kind of rate,\u201d noting that the European average rate is around 22%. <\/p>\n
\u201cEven with a higher rate, they often don\u2019t raise as much revenue as New Zealand, because they have so many exclusions from the base.\u201d <\/p>\n
\u201cIn my former job at the IMF, when people asked which country has the best VAT \u2013 well, we know the answer to that one, it\u2019s New Zealand.\u201d <\/p>\n
Keen said that it was likely New Zealand would need to raise additional revenue in the future through taxation if current service levels are to be maintained, outlining various advantages and pitfalls that could come with those decisions. <\/p>\n
However, he said, \u201cfor a technical guy like me\u201d, simply raising the rate of GST might be the simplest approach. <\/p>\n
Professor on capital gains tax<\/p>\n
On capital gains taxes, Keen said \u201cyou kind of do tax capital gains, but you have kind of a list of things you\u2019ll tax as capital gains and everything else is out, whereas the normal approach \u2013 and I think the approach more consistent with New Zealand\u2019s approach to tax \u2013 is that everything is in, unless we say they\u2019re out.\u201d<\/p>\n
\u201cIt looks strange given the coherence of a lot of New Zealand\u2019s tax system, that the principle isn\u2019t taken to its logical point,\u201d comparing it to the comprehensiveness of New Zealand\u2019s GST. <\/p>\n
Keen said a capital gains tax attracts a lot of attention because \u201cthe appeal of New Zealand\u2019s tax system is that it has these clear principles,\u201d and that it is unusual for income from some sources to be taxed in the form of PAYE, while income sourced from capital gains often isn\u2019t taxed. <\/p>\n
\u201cThe current approach just doesn\u2019t fit with the comprehensive approach to taxation New Zealand currently takes,\u201d he said. <\/p>\n
Among the current fiscal risks facing New Zealand, the Treasury has warned that an ageing population will lead to increasing pressure on public finances and debt, particularly when the increasing costs of superannuation are set against a lower proportion of the population being working-age. <\/p>\n
For the full interview, watch the video above<\/p>\n
Q+A with Jack Tame is made with the support of New Zealand On Air <\/p>\n","protected":false},"excerpt":{"rendered":"A visiting tax expert has lavished praise on a key revenue raiser in the New Zealand tax system,…\n","protected":false},"author":2,"featured_media":61207,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[111,43,139,69,135],"class_list":{"0":"post-61206","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-zealand","8":"tag-new-zealand","9":"tag-news","10":"tag-newzealand","11":"tag-nz","12":"tag-politics"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/61206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=61206"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/61206\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/61207"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=61206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=61206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=61206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}