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Tax Review Panel - The Right Team For The Job

"The quality of the Ministerial Review into the Tax System was always going to depend on the personnel and I am confident we have the right people for the job," revenue Minister Michael Cullen said today.

Robert McLeod, Managing Partner of Arthur Andersen (New Zealand) will chair the Review. The other four members are Srikanta Chatterjee, Professor of Economics at Massey University; Shirley Jones, Chair of the Council of Otago Polytechnic and an accountant specialising in small business; David Patterson, a Partner with the law firm Rudd Watts and Stone; and Ted Sieper, an Australian economist who has advised Governments on both sides of the Tasman.

Their backgrounds include tax accounting, law, economics and involvement with community organisations, providing the Review with a wide range of skills and experience.

“The tax system is a fundamental determinant of economic prosperity so it was vital that we got reviewers of the highest calibre. I am very pleased to have been able to assemble such a depth and breadth of experience on the panel,” Dr Cullen said.

“I am certain that they will make a significant contribution in assisting us to ensure that the tax structure meets New Zealand’s current and future needs.”

The Review will be independent and has been given a comprehensive brief that allows it to consider all relevant options.

“One of my key objectives in establishing the Review is to create a forum in which the important tax policy issues facing New Zealand can be debated and discussed. The Review sends a challenge to all people with a stake in the tax system to think long and hard about what they want to tax or not tax.

"I hope people will rise to that challenge and we can see an informed and constructive debate.

“The Review is not intended to ‘re-invent the wheel’, but to draw upon knowledge and expertise that already exists in New Zealand and elsewhere” said Dr Cullen.

He noted that the Review Team’s budget had been increased from an earlier provisional estimate of $520,000 to $985,000 (including GST). The budget will allow for regular meetings of the Team, consultation with the public, and for the Team to commission external advice.

The Review Team is to report to Government by the end of September 2001. The Government will release the Team’s report and will make public its response to the Review’s recommendations.

“Significant new taxes will not be implemented without first seeking a mandate from the electorate through the 2002 general election,” Dr Cullen said.

Further details about the Tax Review, including the terms of reference, are now available on the Review’s website:

Pen Portraits of the Review Members.
Review Terms of Reference.

Tax Review Team

Robert McLeod
Robert McLeod is currently Managing Partner of Arthur Andersen (New Zealand), one of the "big five" international accounting firms, a member of the Council of the Institute of Chartered Accountants (ICANZ), a former chair of the ICANZ National Tax Committee, a Treaty of Waitangi Fisheries Commissioner and a member of the Business Roundtable. He was a member of the Valabh Tax Review Committee in the early 1990s and of Sir Ivor Richardson’s 1994 Review of Inland Revenue. Of Ngati Porou descent, he is an advisor to a number of Maori organisations.

Srikanta Chatterjee
Srikanta Chatterjee is a Professor of Economics at Massey University. He has a doctorate from the London School of Economics and has taught in Australia, Fiji, India, Japan and Britain. His teaching and research interests include income distribution and inequality and international trade and finance. He has consultancy experience nationally and internationally in these issues and in economic reform.

Shirley Jones
Shirley Jones is a Partner in the accountancy firm S D & N S Jones. She has had a significant involvement with a large number of professional and community organisations. Mrs Jones is currently Chair of the Otago Polytechnic Council and a member of the Board of Presbyterian Support Otago. She is a former member of the Council of the Institute of Chartered Accountants (ICANZ), a former director of the Accident Compensation Corporation and Trust Bank Otago Limited and was the first chair of Workbridge Incorporated. She has also served as a member of the Working Party on Institutional Frameworks for the reform of Tertiary Education and the review working party of I.H.C (Inc.).

David Patterson
David Patterson is a Partner with the commercial law firm Rudd Watts and Stone. One of the leading tax lawyers in New Zealand, he specialises in advising on the structuring and taxation of commercial transactions. He was a member of the Tax Education Office from 1993 until its operations ceased in 1998. He was an attorney with Davis Polk and Wardwell, New York (1985 – 1989) and Paris (1990), and is a member of the New Zealand Law Society and of the International Fiscal Association.

Ted Sieper
Ted Sieper has lectured in economics at the Australian National University, Massey University and Rochester University (N.Y.). He has been an Associate Commissioner of the Australian Productivity Commission (previously the Industries Commission), an advisor to the Australian Treasury, an adviser to the Australian Campbell Committee on financial reform in the mid-1980s and, since the mid-1980s, has advised the New Zealand IRD and Treasury on taxation economics.


The Tax Review has been appointed to carry out a public review into the tax system so that the government has an appropriate framework within which to build tax policy.

The functions of the Review will be:

(i) to examine and inquire into the structure and effects of the present tax system in New Zealand;

(ii) to formulate proposals for improving that system, either by way of making changes to the present system, abolishing any existing form of tax, or introducing new forms of tax; and

(iii) to report to Parliament through the Minister of Finance, the Minister of Revenue and the Minister of Economic Development.


The last 15 years have seen an overhaul of the New Zealand tax system. The main changes have been to remove special allowances and exemptions and varied tax rates. The result has been to broaden the tax base, flatten tax scales and greater resource allocative neutrality.

Critics say that the present tax system allows individuals to arrange their legal affairs so as to escape full rates of personal income tax, treats some types of production unevenly, and favours some forms of long-term saving over others.

A second concern is that the tax system as a whole has become less progressive, while at the same time the interface between the tax and benefit systems is generating very high effective marginal tax rates for some low income people and families.

Thirdly, threats to the tax base are found in new forms of transacting (such as internet trading and internet banking) and the use of new tax havens. A related problem is whether increased globalisation requires re-examination of the very possibility of New Zealand setting its own tax rates and what will happen if it does.

Finally, there is a growing debate about how relevant the tax system is to the core features of the economic structure. (Rival) contenders to augment or replace elements of the current tax structure are sector-specific taxes to be used as an instrument for sectoral assistance, cash flow taxation, financial transactions taxes, and eco-taxes.

There is both the need for and scope to review the tax system at the level of broad principle as well as in some detail. For this reason, it is proposed to divide this process into two stages. The Tax Review is the first stage of the process and will explore the broad principles of the tax system. Stage two will consider the detail of implementing any changes proposed in stage one.


In the budget speech the Government announced:

We will set up a broad-based and wide ranging tax review to advise on the principles and structures best suited to sustaining a robust revenue base over the long term.

The review will concentrate on how it is possible to ensure a sustainable and continuous flow of revenue to meet Government requirements in the face of changing economic, social and technological conditions. It will form the basis of advice to the Government in broad terms about whether the New Zealand tax system can be improved.

Ideally the tax system should raise revenue simply, efficiently, fairly and reliably in an environment of changing technology, growing globalisation and increasing complexity. It should do this in ways that do not materially undermine the environment, social cohesion or the effective use of resources.

Task of the Tax Review

The Tax Review will:

(a) assess the extent to which the tax system can contribute to broader social and economic objectives such as encouraging secure, high-quality employment, generating a fair distribution of income, maintaining a sustainable environment and promoting higher savings;

(b) Recommend structural changes for the tax system, if appropriate. In doing so the Review will focus on the following questions:

(i) Can the tax system be made fairer in its role of redistributing income? This includes considering whether the income tax base should be broadened and the extent to which marginal rates should increase with levels of income, wealth and expenditure. The Review should consider the best mix between different tax bases such as income, consumption, financial transactions and wealth.

(ii) How can the tax system be designed to encourage desirable behaviour (e.g. work and savings) and discourage undesirable behaviour (e.g. the wasteful use of non-renewable resources)?

(iii) How can the level of tax that is reasonably required by government for the provision of essential social services such as health, education, superannuation and social welfare be achieved reliably in the medium and long-term bearing in mind the need for the tax system to be an effective instrument of fiscal policy in the management of the economy?

(iv) Do the tax system and tax rates need to be modified in light of new technology and international competition?

(c) The Tax Review will report on progress to the Minister of Finance, the Minister of Revenue and the Minister of Economic Development at regular intervals during the course of the review.

The conclusions need to be sufficiently general so that they can serve as a guide to overall tax policy, but sufficiently particular so that they provide a clear idea of the actual tax policies that they would lead to. The Review will submit its final report to the Minister Finance, the Minister of Revenue and the Minister of Economic Development by the end of September 2001.

Process Expectations

The process should be inclusive, with opportunity for the public and key stakeholders to provide input, perhaps by way of the Review commissioning studies, preparing and releasing issues papers and arranging various discussion fora.

Since tax policy is a well-developed field, the Review would gather and assess the views of stakeholders and previous studies, rather than devising principles and policies from scratch. The Review’s reporting deadline (by the end of September 2001) reinforces this.

The Government would make available relevant tax-policy officials from Treasury and IRD to provide analytic and secretariat support, and would expect them to contribute significantly to the Review. The support will include a secretary to the Review, reporting to the Chair of the Review, to co-ordinate the support services to be provided. The Review team will have the ability and the budget to engage external parties to provide advice and assistance on specific issues.

Officials and the Review team would keep Ministers informed of the progress of the Review.

The Government will consider the report of the Review, and indicate publicly its views on what principles should guide tax policy and what the general structure of the tax system should be.

Stage two of the process will develop the conclusions reached during the tax review and construct a set of workable proposals that can be put before the New Zealand public in the context of the 2002 general election.

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