Tax Working Group - Terms of Reference Announced

24 November 2017

The Labour Government have now announced the terms of reference for their upcoming Tax Working Group (TWG), which is to be chaired by Michael Cullen.  

They have once again, within the terms of reference, reiterated the examption for the family home within this review, though looking into taxation of housing more general remains a key area.  Some specific points within these terms have potential, such as reporting on, "Whether the tax system promotes the right balance between supporting the productive economy and the speculative economy". Also listed, is a directive to investigate, "Whether a progressive company tax (with a lower rate for small companies) would improve the tax system and the business environment".

The fill list of members is yet to be announced, but the group is set to have its first meeting no later than February 2018. 

The full terms of reference are below:

Tax Working Group – Terms of Reference

The Tax Working Group has been established by the Government in order to examine further improvements in the structure, fairness and balance of the tax system.

The New Zealand tax system has been justifiably commended internationally for being a simple and efficient system. The Government’s starting position is that the guiding principle for the New Zealand tax system – namely, that tax should operate neutrally and as much in the background as possible – is sound.

The Working Group will consider what improvements to this framework could improve the structure, fairness and balance of the tax system. In particular, the Working Group will consider the impact on the tax system of the likely economic environment over the next decade.

The Government has the following objectives for the tax system:

The Working Group should report to the Government on:

In examining the points above, the Working Group should consider in particular the following:

In considering the matters above, the Working Group should have due regard to the overall structure of the tax system to ensure it is fair, balanced and efficient, as well as simple for taxpayers to understand and comply with their tax obligations.

The following are outside the scope of the Working Group’s review:

In addition, the focus of the Working Group should not be on more technical matters already under review as part of the Tax Policy Work Programme, including:

The Working Group will be able to recommend further reviews be undertaken on specific issues which the group considers it has not been able to explore sufficiently, or that were excluded from its terms of reference but which could benefit from being considered in the context of its recommendations.

The Working Group’s membership will include individual(s) with expertise in Maori community and business environments.

The Working Group will be supported by a secretariat of officials from Treasury and Inland Revenue, and it will be able to seek independent advice and analysis on any matter within the scope of its Terms of Reference.  The Working Group will have an independent advisor to analyse the various sources of advice received by the Working Group and help to analyse and distil the information to assist the Working Group’s deliberations.  The Working Group will be expected to engage with the public in developing its recommendations.

The Working Group should have its first meeting no later than February 2018, issue an interim report to the Minister of Finance and Minister of Revenue no later than September 2018, and issue a final report to the Minister of Finance and Minister of Revenue no later than February 2019.  These dates may be varied with the consent of the Minister of Finance.