Tax Working Group Final Report – 99 not out!
The Tax Working Group (TWG) has made 99 recommendations in its Final Report. The recommendations reflect the wide ranging and detailed nature of the TWG’s work. As we said with the Interim report, that work is good and valuable.
The centrepiece is four packages of measures that the Government may implement. The packages rely on a broader taxation of capital income (CGT) being accepted. The majority of the TWG consider that the fairness impact of a CGT outweighs the costs of a CGT. The packages, which reduce tax in other areas, will only be revenue neutral if a CGT is implemented.
The TWG’s recommendations reflect judgement. The Final Report highlights the trade-offs made and states that reasonable people will have different judgements.
There is no certainty that any of these recommendations will be implemented. The Final Report is now being considered by the Government. Its decisions are to be announced in April with further consultation before an effective date of 1 April 2021 at the earliest.
The TWG encourages further engagement by all New Zealanders in the process. There will be a consultation process and an opportunity to submit to parliament on the implementing Bill.
We encourage you to have these questions in mind:
• What is the direct impact on you of a package in the short, medium, long-term? (i.e. do reductions in tax compensate for a future tax liability)?
• What is the impact of a package at a business, economy and social level?
• Does this make the tax system as a whole better?
The answers will be personal. Hopefully, this and other commentary will help you with your answers.