The government's Savings Working Group is being given a huge brief – including areas already covered by last year's Tax Working Group.The working group is to look at changing the whole basis of taxation in New Zealand to a dual approach, with labour
The government’s Savings Working Group is being given a huge brief – including areas already covered by last year’s Tax Working Group.
The working group is to look at changing the whole basis of taxation in New Zealand to a dual approach, with labour and capital taxed differently.
The Tax Working Group looked at this option – which is used in some Scandinavian countries – but advised it needs more work.
Even more radically, the group is to look at indexation of the tax system to inflation, to eliminate the impact of inflation pulling people into higher tax brackets.
The Savings Working Group is precluded from looking at the taxpayer-funded New Zealand superannuation and has also been advised to take note that the government does not want a capital gains tax or a land tax.
It is, however, to review KiwiSaver, its current set of incentives and subsidies, and whether it is to remain voluntary or become compulsory.
The group is also to look at wider issues of savings such as long-term fiscal policy and the government’s debt.
“We have deliberately set wide terms of reference for the Working Group. The only exclusions are New Zealand Superannuation, which this Government will not change, and broad taxation of capital gains or land, which we have previously said we will not introduce," Finance Minister Bill English said.
“Otherwise, we are not ruling anything in or out,” he added.
The Savings Working Group will be chaired by company director and consultant Kerry McDonald. Other Working Group members are:
Dr Craig Ansley - Capital Markets Research director
Dr Andrew Coleman - Motu Economic and Public Policy Research senior fellow
Mary Holm - financial columnist, Auckland University senior lecturer
Dr John McDermott - Reserve Bank assistant governor
Paul Mersi - PricewaterhouseCoopers partner
Stephen Toplis - Bank of New Zealand head of research
The group is to report by the end of January. Working Group members will be paid about $70,000 in total.
Working Group website (including Terms of Reference):
www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup
