Government needs more sources of tax revenue: expert
John Cuthbertson, Chartered Accountant in Australia and New Zealand, was referring to the New Zealand tax system.
Mr Cuthbertson gave a presentation at the Chartered Accountants Tax Roadshow which visited Dunedin and Cromwell this week.
The annual event was designed to discuss the most pressing tax topics affecting members of Chartered Accountants.
This year’s roadshow focused on the new light line rules and other changes to the tax regime, such as new disclosure requirements for trusts that would come into effect next year.
Mr. Cuthbertson, who is a Chartered Accountant, has worked in the tax industry since 1991.
He has been with Chartered Accountants for five years and previously served as Director of Tax at PricewaterhouseCoopers for approximately 25 years.
As the population aged and the gig economy – where workers leave their traditional jobs to work independently on a task-by-task basis for various employers – became more important, the country needed to look at different ways to generate income. , did he declare.
Although New Zealand could be considered to have a “broad-based” tax system, he did not believe so.
The country had three main sources of taxation: personal income tax, goods and services tax, and corporation tax.
Other sources of tax revenue should be considered for the future viability of the system, he said.
“I don’t think the system is immediately upset, but I think it will change over time.”
With an election next year, Mr Cuthbertson expected there to be a discussion on the subject.
Revenue Minister David Parker recently announced that the government is developing tax principles legislation to ensure fairness in the tax system.
When crafting the bill, the government had to be careful in designing the framework of what fairness looked like.
“It will be more subjective and open to manipulation…that’s where there will be differences of opinion,” he said.
The chartered accountants also wanted to see the “enshrinement” of the generic tax policy process in the Tax Principles Act, which would ensure that the legislation was still “workable and practical”.
Another element of a good system was compliance and administration costs.
“For a tax system, you want it to be easy to obey and hard to break,” he said.