Government response to the Tax Working Group recommendations

Most of the attention on the Government response to the recommendations from the Tax Working Group report was on the scrapping of plans for any new type of Capital Gains Tax. See CGT backdown, everyone claims victory.

But the report also covered a number of other tax changes.

Beehive:  Govt responds to Tax Working Group report

The Coalition Government today released its response to the recommendations of the independent Tax Working Group report.

The report found that on the whole New Zealand’s tax system was working well, but made a number of recommendations to improve fairness, balance and structure.

The Government is not adopting any of the recommendations on capital gains taxation and has agreed no further work is necessary on that aspect of the report.

Winston Peters said no, so Labour and the Greens agreed that their CGT plans were stuffed.

“The final report covered all aspects of the tax system, and a number of the recommendations will now be considered for inclusion in the Government’s Tax Policy Work Programme,” Grant Robertson said.

“That includes exploring options for targeting land speculation and land banking.

“We intend to direct the Productivity Commission to include vacant land taxes within its inquiry into local government funding and financing,” Grant Robertson said.

Exploring options? I thought that’s what the TWG was supposed to have done.  But now they are going on to exploring more and doing another inquiry. Given the supposed purpose of the TWG, this sounds like further kicking of the tax can down a dusty potholed road.

“Officials have been directed to prioritise work on the TWG’s recommendations on ways to encourage investment in significant infrastructure projects and improve the integrity of the tax system to crack down on tax dodgers,” Stuart Nash said.

A refreshed tax policy work programme will be released mid-year.

So yesterday they announced what they plan on announcing later in the year.

The Coalition Government reiterated it will not introduce resource rentals for water or a fertiliser tax in this term of Parliament.

Another Peters veto of Labour and Green plans?

Other priorities for the Government this year include progressing legislation for research and development tax incentives; GST on low-value goods from offshore suppliers; a discussion document on a digital services tax, and further work to ensure multinationals pay their fair share of tax.

On to a discussion document and further work on things that have been talked about for years.

Summary of the Government’s responses to the recommendations

In that summary there are a number of TWG recommendations flagged as “Endorse the TWG recommendation” – in just about every case the recommendation is not to change anything.

There are several recommendations flagged as “Consider as a high priority for work programme”, meaning no decision has been made on what to do.

What was this Government response for? It has done little but admit they were abandoning any CGT plans indefinitely.

Cullen to be paid $1k a day for ongoing media work on tax recommendations

I think it’s unusual for the chairman of a Government working group to continue promoting recommendations and defending the Government’s position via media after delivery of their report. I hope it’s more unusual to be paid $1000 a day to do it.

Stuff: Sir Michael Cullen debates impact of tax reform on farmers, without the politics

Sir Michael Cullen has continued his public statements on the impact of capital gains tax, although his tone has softened considerably.

On Wednesday the Tax Working Group chairman released a lengthy statement on the impact the proposals of the Tax Working Group would have on farms.

It came two days after the former Labour MP and minister of finance questioned statements made by the National Party about the possible impact on KiwiSaver.

Cullen did not say why he issued the latest statement, instead claiming he had “responded to a request to comment on recent claims about the effect on farmers”.

This week it emerged that while the Tax Working Group has disbanded, Cullen has had his contract extended by the Government.

Cabinet papers show Cullen was to be paid $1062 a day in his role as chairman of the TWG.

“We extended his appointment as the chair of the TWG to 30 June because we were aware there would be extended public discussion on the report, and this has played out,” Finance Minister Grant Robertson said in a statement.

That will be close to $100,000 over three months.  Where is Ardern’s so-called fairness in this?

If Ardern and Robertson aren’t capable of explaining and defending the working group recommendations then perhaps they should be paying Cullen out of their salaries.

Cullen confirms CGT will not be addressed in interim TWG report

Michael Cullen, chairman of the tax Working Group, has confirmed that the interim report due to be released this month will make no recommendations on a Capital Gains Tax.

Stuff: Absence of tax recommendation means ‘more uncertainty for longer’, says National

The Tax Working Group will not recommend whether or not New Zealand should get a broad-based capital gains tax, in an interim report due out this month, chairman Sir Michael Cullen has confirmed.

Stuff had previously reported that any recommendation on the controversial tax would be deferred until the working group publishes its final report in February.

Cullen said on Wednesday that he was “happy to confirm that”.

Finance Minister Grant Robertson has played down the implications, saying the work the Tax Working Group was involved in was “always supposed to be a two-stage process”.It seems remarkable that one of Labour’s most prominent policies and their big tax policy, CGT, would not be addressed on the first report.

Surely for a tax package to make any sense it would include the major components, in general terms at least.

As Amy Adams says, this won’t do anything to address uncertainty in the business community.

It seems to confirm that what the TWG would like to recommend on a workable CGT is outside the parameters given them, or Labour have indicated is not something they want to hear at this stage.