Hon Peter Dunne
Minister of Revenue

Tuesday, 1 December 2009
Media Statement

Dunne: NZ has chance to develop world class tax system

New Zealand has the opportunity to develop a world class tax system, according to Revenue Minister Peter Dunne.

Giving the closing address to the Tax Working Group’s conference today, Mr Dunne said that the policy debate the Working Group has led over the last few months and the recommendations in its forthcoming report to Ministers had contributed significantly to achieving that goal.

“For virtually the first time, we have been able to have a thorough, open and transparent debate about tax policies, without the process being subject to political hijacking or kneecapping.

“That has been extremely positive, and a tribute to the way the independent Working Group has operated, and I will be keen to explore separately with Victoria University how we can make ongoing use of this approach in the future,” he said.

Mr Dunne recalled that the backdrop to the Working Group’s consideration was the Government’s commitment to aligning the corporate, trust and top personal tax rates at 30 cents, and the need to bridge the approximately $1.6 billion revenue loss associated with this.

“This has provided the opportunity for the Working Group to look at a range of base broadening options in a balanced way, against the dual tests of what is necessary and achievable on the one hand, and politically and fiscally sustainable on the other hand.

“There is simply no point in embarking upon a tax reform programme that might be desirable from a purist perspective but which is socially inequitable, or administratively impractical.

“The Government is unlikely to accept solutions that go beyond what most New Zealanders would see as fair or reasonable.

“Above all, our tax system must aim to be fair, efficient and uncomplicated,” he said.

Mr Dunne said that world class tax policy had to be matched by world class tax administration.

“Our tax administration still relies too heavily on the technology of the late 1980s and early 1990s, which has to change.

“In today’s electronic age, it is simply no longer appropriate for Inland Revenue to be sending out 25 million items of correspondence a year – 100,000 letters each working day –to taxpayers, when most people did their business and their banking electronically.

“Our system has to undergo the same changes: we are already shifting the administration of student loans to an electronic based approach, and next year I will be advancing proposals to similarly reform the PAYE system.

“These changes have to go hand-in-hand with changes to tax policy – it will be all very well having the best tax policies in the world, but that will count for nothing if we do not have the system in place to administer them,” he said.

ENDS

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