Closing the Gap Submission to Government Tax Working Group
Submission to Government Tax Working Group
Our Basic Submission
Who we are and why are we doing this: We are Income Equality Aotearoa New Zealand Inc –Closing the Gap. We have some 3000 supporters from around the country.
Research clearly shows that significant inequality is bad for any country in terms of health, economics and many other social issues, and that inequality is much worse in New Zealand that it was some 30 years ago.
The tax system has a significant effect on inequality and so our system should be modified to help reduce inequality in New Zealand. Also the current system is unfair and inconsistent (not all income is taxed, very low incomes are taxed, capital gains taxes are minimal and there no inheritance taxes )
Overall we believe that it is possible for all New Zealanders to enjoy a decent life, one where everyone thrives. In particular every kid deserves a good start. But we recognise that big imbalances of income and wealth have been deeply destructive, and make the ideal above very difficult to achieve
Our vision for New Zealand: A tax structure which incorporates all incomes, wealth, individuals and businesses, is socially responsible, is fair to all, helps us ensure a quality life for all, now and in the future, and is a major influence on helping to reduce inequality.
A tax system which is promoted as, and recognized as, a positive contribution to public good. It is the price we pay for a civilized society.
It is our belief that the system should provide a higher overall tax take for Government which, together with more generous welfare and income support payments enables all to live decent lives. See appendix 2 re increased tax take and welfare
Our basic submission: we need a tax system that .
• is significantly more
progressive than as at present ie with higher taxes for very
high incomes and lower or no taxes for those on low
• taxes wealth, either annually and/or when assets are sold, probably through a universal capital gains tax
• provides a higher overall tax take for Government see appendix 2 Preamble no. 4
• together with more generous welfare and income support payments enables all to live decent lives. See appendix 2 re welfare Preamble no.5
Questions Asked by the Tax Working Group
1. What Does the Future of Tax Look like to you?
(A)Tax is the price we pay for civilisation. Therefore it will always be important.
Governments need to tax to:
1) have enough
money to provide services eg education, health
2) have enough money for redistribution of income/wealth to
a. ensure all can live decent lives
b. reduce inequality
certain behaviours, personal, for example smoking, and
environmental, for example recycling and
(B) Sources of Tax.
1)Because of our rapidly changing world and the interests of fairness, equity and ability to pay, the source of taxation must be as broad/wide as possible. This also ensures that in the light of changing circumstances the tax system can be adjusted without significant disruption. Tax should be paid on ALL income or financial benefits accruing to an individual or organisation including capital gain. We recognise that this includes tax on the capital gain on the family home. While this is excluded through the terms of reference, we believe that the final report should include comments about this.
As this stands it does provide a loophole that can be exploited and will not help in making housing affordable. There could be exclusions or exceptions in terms of how such a tax might be levied to make this more politically palatable. It is noted that overseas where the family home is subject to CGT then there are various mechanisms to alleviate that tax, such as reduced rates, tax free allowance, exceptions where the proceeds of sale are offset against any new home purchased and only the net gain is taxed
2)Things that can be targeted by authorities to promote or curb the use of. See 1(A) 3 above.
(C)Who Pays and How the tax is paid:
• all over 16
• we believe that everyone should furnish a return so that all income regardless of source is included ie superannuation, benefits, capital gain, gifts, inheritances. This also reinforces the importance of the tax system in terms of a decent life for all.
2.What is the purpose of tax? See above 1(A) and
To significantly reduce income and wealth inequality.
To have an impact on the price of housing.
To pay for Govt services, and encourage/discourage some activities. See 1(A)3 above
3.Are we taxing the right things?
Yes but you need to expand the net significantly to include ALL income regardless of source for individuals and organisations
4.Can tax make housing more affordable?
Yes. Apart from renting, the taxation system must discourage people from using housing as an investment. Housing should simply be there to provide accommodation and people should be encouraged to use other avenues for investment opportunities. This is also one of the reasons why capital gains tax in some form should be levied on the family home.
5.What tax issues matter most to you?
Reducing inequality in both income and wealth
Reducing accommodation costs—the cost buying “homes”, and reduce the cost of renting
Looking after the environment—flora, fauna, water, climate change in particular
Getting rid of poverty.
Producing sufficient income for the Government to properly provide services for all—see Appendix 2 Preamble no. 4