By Jennifer Colwill
The first signs of a shake-up to the tax system are likely to be revealed in May's budget after a high-powered tax working group delivered a review of the system.
GST, personal tax rates and property tax are all under the spotlight, and the experts agree a fairer system is needed.
The suggestions from the tax working group are aimed at producing a fairer, more efficient tax system.
One economist says if land taxes and GST increases happen, the wealthy won't be able to hide their income.
“They tend to be very efficient taxes and that is both fair, but its also efficient in terms of putting New Zealand on a sustainable footing for the next 10 years,” says Cameron Bagrie, ANZ national chief economist.
Real estate is also on the hit list with suggestions of a new tax on residential rental properties.
“It should drive a transparency around the real rent cost and the real rent paid as a yield,” says Alistair Helm of Realestate.co.nz.
“That's all hidden at the moment in the ability for people to try and deduct as much as possible and pay as little tax as possible.”
GST could rise to 15 percent and one tax expert agrees this would make things fairer.
John Rowe says when the income tax system is set up, it can include compensation for the increase to GST.
“It's generally accepted that those higher income earners proportionately pay more in GST, so if you compensate the lower income earners by bringing down the tax rates as well they'll have more money in their pockets to offset any increase in GST,” he says.
Labour leader Phil Goff says any changes to the tax system need to help the average hardworking kiwi.
He also says loopholes need addressing.
“If you've got half of the people earning the big money in this country paying a lower tax rate than the average hard-working New Zealander, there's something wrong with the system,” he says.
“That's got to be fixed.”
The Government says it will carefully consider all the recommendations.
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