Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Dunne Speaks

Dunne Speaks

4 September 2014

Tax seems to have become the first real issue of the election, following the distractions of recent weeks.

And, as usual with tax debates, the argument quickly has descended into the devil of the detail. The one certainty about tax policy is its inherent complexity, the fact there will always be winners and losers, and frequently unintended consequences.

The fundamental point of a tax system often gets overlooked – its primary purpose is to raise the revenue a government needs to carry out its functions. Income versus expenditure, if you like. When I was Minister of Revenue, I had prominently on my desk a copy of Canada’s first Income Tax Act passed in 1917 – a slim volume of just 11 pages. It made the point by its brevity that the collection of tax was a mechanical process which needed to be properly applied. As a standard for tax administration, it is probably as relevant as ever today.

However, tax policy has been distorted over the years and around the world by governments of all stripes who have sought to use the tax system for all range of other purposes – from encouraging and incentivising particular forms of behaviour in business, through to discouraging or severely penalising other forms of economic activity deemed socially, politically or economically undesirable. The more governments have sought to use the tax system in this way, the more complicated it has become, and the more uneven and prone to anomalies it has been seen to be. And a whole new industry of interpreting, devising ways around the system, exploiting the system for advantage, or just finding new activities to escape the tax net has sprung up the world over, with now dramatic implications in the digital era for international tax collection in particular.

This is the backdrop against which the current tax debate in New Zealand is being conducted. Like most tax debates, it is missing the point. The argument should not be about what new distortionary taxes can be introduced to skew behaviour one way or the other, but more about the basic point of ensuring that all the taxes levied are properly collected. The debate this week over the details of Labour’s proposed Capital Gains Tax simply presages more complexity, more issues with avoidance and boundary definitions, and overall, a less simple tax system, should the policy ever be implemented. Similar problems lie ahead with the tax free thresholds being proposed by the Greens and the Conservatives. For its part, National needs to be careful about grafting too much of the welfare system’s income support policies onto the tax system, for similar reasons.

From my vantage point, having been at the heart of and now outside the tax policy loop, the situation is clearer than ever. The key to good tax policy in the future is governments getting back to the basics – ensuring the system collects the revenue they need to do their job, and not trying to use taxes to re-organise the world the way their prejudices dictate.

ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Patience: Drive Safe

Be patient before passing is the AA's message for drivers this Labour weekend.

"People taking crazy risks to get past other vehicles is one of the most dangerous things on the road,” says AA spokesperson Dylan Thomsen.

“The weather is looking good for the long weekend so the roads will be busy. Unfortunately, that also increases the chances of people getting frustrated and trying a risky passing manoeuvre. When they get past, there will probably be more traffic up ahead anyway so it won’t get people there faster.” More>>

 
 

Parliament Today:

Employment Relations Bill: Govt Strains To Get Tea Break Law Through

The Government has been left with egg on its face - failing to get its much-vaunted, but hugely unpopular, meal break law passed in the first week of its new term, Labour spokesperson on Labour Issues Andrew Little says. More>>

ALSO:

Guns: Police Association Call To Arm Police Full Time

"The new minister gave his view, that Police do not need to be armed, while standing on the forecourt of parliament. The dark irony was that the interview followed immediately after breaking news of a gunman running amok in the Canadian parliament in Ottawa..." More>>

ALSO:

Gordon Campbell: On The Tokenism Of New Zealand's Role Against Islamic State

Our contribution against IS will be to send SAS forces to train the Iraqis? That’s like offering trainers to General Custer just as the 7th cavalry reached the Little Big Horn. More>>

ALSO:

Scoop Business: Shell And Todd Caught Drilling Without Approval

Multi-national oil company Shell’s New Zealand arm and local energy giant Todd Energy have breached the new law governing New Zealand’s Exclusive Economic Zone, the Environmental Protection Authority says in an Oct. 10 document released by the Green Party. More>>

ALSO:

Gordon Campbell: On Pharmac, Gough Whitlam And Sleater-Kinney

We’re not at the outset of these negotiations. The outset was six years ago, and negotiators were hoping to have some sort of ‘framework’ deal finished in time for the APEC meeting in a few weeks’ time. These ‘extreme’ positions are what we’ve reached near the intended end of the negotiations… More>>

ALSO:

PM Of Many Hats: Questions, No Answers On Whale Oil

Dr RUSSEL NORMAN (Co-Leader – Green) to the Prime Minister: How many times since November 2008 has he spoken with blogger Cameron Slater on the phone and how many times, if any, has he texted him?
Rt Hon JOHN KEY (Prime Minister): None in my capacity as Prime Minister. More>>

ALSO:

Aussie Investigation Dropped: Call On Minister McCully To Pursue The Case Of Balibo Five

West Papua Action is deeply concerned at the lack of any clear outcome from the Australian Federal Police inquiry into the 1975 deaths of the ‘Balibo Five’ including NZ journalist Gary Cunningham. More>>

ALSO:

'Feed The Kids' Bill: Metiria Turei To Lead Fight On Feeding Hungry Children

Green Party Co-leader Metiria Turei is urging all political parties to support the Feed the Kids Bill which she inherited today from Mana leader Hone Harawira. More>>

ALSO:

Parliament Today: State Opening Of Parliament

The House sat at 10.30am on Tuesday before MPs were summoned to hear the Speech from the Throne in the Legislative Council Chamber. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news