Opinion Piece: UK Tax Expert Chas Roy-Chowdhury
Chas Roy-Chowdhury is head of taxation at ACCA Global in the UK.
New Zealand needs to be commended for its consultation processes on tax reform. This new Tax Working Group has until February 2019 to report back its recommendations and even then, no new taxes will be adopted until after the next election giving the public a real and meaningful chance to be heard.
This might explain the findings of a new report titled Public Trust in Tax in NZ which found Kiwis trust their politicians a lot more than others in G20 countries.
The report also found most New Zealanders are happy with government tax incentives for retirement planning and green energy projects but are less supportive of tax incentives to attract international investment.
The Tax Working Group, headed by Sir Michael Cullen has a wide mandate to look at the country’s whole tax system but it needs to tread carefully if it moves to cool the housing market.
In the past, some governments around the world have stepped in to try and keep a lid on housing prices, often imposing restrictions on foreign ownership, introducing capital gains tax, or forcing banks to tighten lending practices.
New Zealand has an opportunity to learn from the successes and failures of these efforts, particularly when this country needs to continue to attract foreign investment to maintain its economic growth trajectory.
New Zealand should be looking at increasing supply rather than trying to restrict demand.
Conversely, any moves to restrict or halt foreign acquisition of existing properties sends all the wrong messages. This will limit inward investment and high-value migration that could otherwise increase tax revenues.
On GST, the Tax Working Group is looking at GST exemptions. With the cost of living constantly on the rise a welcome move would be removing GST from basic food items and fruit and vegetables.