Ardern argues in defence of more complicated taxes

Some people (including me) hoped that a decent review of New Zealand’s tax (and welfare) system would lead to simplifications. Complexities add to costs, and they tend to lead to distortions and unfairness – rich people are generally more successful at finding ways around complex tax law.

Jacinda Ardern keeps pushing more ‘fairness’ as a primary reason for tax reform, and she did this again in Parliament yesterday, but she also appeared to concede that this justified a more complicated tax system.

David Seymour: Is it possible that a proposed capital gains tax could be revenue-neutral?

Rt Hon JACINDA ARDERN: That is certainly the request that we made of the Tax Working Group. It was to consider options around making the package revenue-neutral.

That sounds lie a very fuzzy lack of commitment to ‘revenue-neutral’ tax changes.

David Seymour: Why would a Government request advice that would make a tax system more complicated, to get the same amount of revenue?

Rt Hon JACINDA ARDERN: Two points: firstly, to make the tax system fairer—which seems like a pretty good reason to members on this side of the House—and secondly, almost every member of the OECD manages to deal with what is being asserted to be complicated; why can’t we?

Ardern didn’t dispute “a Government request advice that would make a tax system more complicated” – in fact she justified it  “to make the tax system fairer”.

The more complicated it is the greater the chance of unfair anomalies and loopholes.