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

 

Two Years With New Methods: Crime Stats Show Increase Led By Burglary

The two years of data show an increase in the total victimisation rate of 3.1 per cent, with 12,060 more victimisations in the 2015/16 year when compared to 2014/15 year. From this increase, 72 per cent is attributable to burglaries. More>>

ALSO:

Auckland Relocation Grants: 12 Grants Paid So Far

Since the policy took effect one month ago, 12 applicants have received the non-recoverable grant, supporting 32 people. $54,508 has been paid out, covering things like moving costs, bond, rent in advance and letting fees. More>>

ALSO:

Vaccine Funding Change: HPV Vaccines For All Children

PHARMAC has today announced changes to funded vaccines, which will benefit an extra 100,000 people... The human papillomavirus (HPV) vaccine will be available for all children and adults up to the age of 26 years, and boys will now be included in the HPV school vaccination programme. More>>

ALSO:

Gordon Campbell: On Why The Opinion Polls For Key And Trump Defy Gravity

What is going on? Donald Trump got confirmed as the Republican presidential candidate at a bizarrely chaotic political convention… and promptly received an upwards bump in the polls to where he’s now rating ahead of Hillary Clinton, for only the second time this year. More>>

Sugar: Auckland Leisure Centres Axe Unhealthy Drinks

Auckland Council is to stop selling drinks that are sweetened by sugar from vending machines at its leisure centres in a bid to try to reduce obesity and type 2 diabetes... More>>

ALSO:

Gordon Campbell: On Todd McClay’s Faulty Memory

Time and again, whenever an issue arises the initial response by government is to deny or diminish the problem – nothing to worry about here, everything’s OK, move on. Then, hang on. In line with the usual pattern, as embarrassing details emerged into daylight, the story changed. More>>

ALSO:

Labour's 'Future Of Work': Major Reform Of Careers And Apprenticeships

The next Labour Government will transform careers advice in high schools to ensure every student has a personalised career plan, Leader of the Opposition Andrew Little says. More>>

ALSO:

State Investments Management: Treasury Likes IRD, Not Education Or Corrections

The Inland Revenue Department has scored an 'A' in the first tranche of the Treasury's investor confidence rating for state agencies that manage significant Crown investments and assets, gaining greater autonomy as a result, while the Corrections and Education ministries gained a 'C' rating. More>>

ALSO:

Govt Goal: NZ To Be "Predator Free" By 2050

Prime Minister John Key has today announced the Government has adopted the goal of New Zealand becoming Predator Free by 2050... “That’s why we have adopted this goal. Our ambition is that by 2050 every single part of New Zealand will be completely free of rats, stoats and possums." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news