Dunne signals more tax grabs in Budget 2013

Expect more bach, boat and paperboy tax grabs.

That was the message from Revenue Minister Peter Dunne to the New Zealand Institute of Chartered Accountants’ tax conference today.

Tax officials have already begun preparing proposals for Budget 2013 and although nothing has been decided yet Mr Dunne says the approach will be similar to the kind of tweaks seen in the last two Budgets.

“I am not making Budget announcements today – we are not yet at that point – but I can tell you that in line with successive Budgets and recent tax changes we will continue to make the system fairer and more efficient.”

Those changes are aimed at helping the government return to surplus by its target date of the 2014-15 financial year, he says. 

By implication, this means any moves to make the system “fairer and more efficient” will be aimed at raising rather than reducing taxation.

However, Mr Dunne says if this were the sole criterion the government would have simply raised tax rates.

“To assist with returning to surplus we need to maintain robust taxes in order to raise the revenue we need to fund Government services and functions.

“But we will do it in ways that are as fair and efficient as possible, and that means that we apply existing tax bases more broadly to reduce distortions to investment and increase fairness so the tax burden is spread more evenly.

“This year’s Budget tax announcements inspired some to accuse the government of scraping the bottom of the barrel, casting around desperately for any dollar we could.

“While that is a colourful description, it is simply missing the point entirely.

“If the objective was to raise as much revenue as possible, we could do that very easily by raising rates or imposing new taxes, whereas the Budget decisions were about tidying up the system and removing outdated some tax credits.”

More explicitly, Mr Dunne says higher tax rates, a capital gains tax and/or a financial transactions tax would not help New Zealand.

Calling advocates for New Zealand to copy some EU countries in examining a financial transactions tax “sad and predictable”, he says “taxes that were dumb to introduce in the past are likely to still be dumb to introduce in the future".

“We are not in the business of rushing about applying quick-fix measures every time a new crisis arises.”