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New Zealand’s Tax Working Group Final Report

08 / 04 / 19

The New Zealand government has commissioned a review of the country’s tax system. The Tax Working Group was chaired by the Hon Michael Cullen KNZM (Member of the New Zealand Order of Merit). After a period of consultation the Group has released its Final Report. Among the areas examined are so called corrective taxes, or taxes that intend to influence behaviour and lead to better health and wellbeing outcomes. Currently these include levies on alcohol and tobacco. The Working Group acknowledge widespread public interest in adopting a sugar tax, however they say it must meet government objectives.

“The case for a sugar tax must rest on a clear view of the Government’s objectives. If the Government wishes to reduce the consumption of sugar across the board, a sugar tax is likely to be an effective response. If the Government wishes to reduce the sugar content of particular products, regulation is likely to be more effective. In either case, there is a need to consider the use of taxation, alongside other potential policy responses.”

The Working Group, “recommends that the Government develop a clearer articulation of its goals regarding sugar consumption…”

Also of interest is their recommendation to leave their GST (Goods and Services Tax) as it is and not exclude products such as food and drink, as is the case in Australia where basic foods are exempt from GST.

The Working Group considers there is significant scope for the tax system to play a greater role in sustaining and enhancing New Zealand’s natural capital and help address environmental challenges. They recommend the current Emissions Trading Scheme (ETS) be more like a carbon tax, and new taxes on solid waste to reduce landfills, and on water pollution and extraction.

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