Information about the Government's objectives for the tax system.
The Government is committed to building a stronger economy and increasing productivity.
The tax system should be as fair and efficient as possible in raising the revenue required to meet the Government's needs. The Government supports a broad-base, low-rate tax system that minimises economic distortions.
The Government considers these goals are best supported by a tax system that:
- maintains revenue flows to pay for valued public services and reduce debt
- responds to New Zealand's medium-term needs in a planned and coherent way
- biases economic decisions as little as possible - which allows people to work, save, spend or invest in ways that they believe are best for them
- rewards effort and individuals' investment in their own skills
- has low compliance costs and low administrative costs
- minimises opportunities for tax avoidance and evasion, and
- shares the tax burden as fairly as possible.
The Government's strategy is to raise revenue in ways that meet these objectives.
Relationship with Economic and Fiscal Strategy
This revenue strategy has been produced as part of the strategic phase of the generic tax policy process. It supports the Government's economic and fiscal strategy.
The Government's fiscal priorities include maintaining rising operating surpluses over the forecast period so that cash surpluses are generated and net debt begins to reduce in dollar terms; reducing net debt to around 20 per cent of GDP in 2020, and to between 10 per cent and 15 per cent of GDP by 2025; investing in the public services and infrastructure needed for a growing country; and as fiscal conditions allow, adjusting tax and transfer settings to improve family incomes and simplify the income tax and transfer system.
A comprehensive review of New Zealand's tax system was undertaken in 2009 by the Tax Working Group. As a result of this review, major tax reforms were announced in Budget 2010, including a reduction in all personal tax rates, a reduction in the company tax rate, stricter rules around property and an increase in GST.
Tax Policy Work Programme
The tax policy work programme is designed to implement the Government's revenue strategy. It will deliver tax policy:
- consistent with a broad-base, low-rate tax system that raises revenue in the most efficient manner
- appropriate for the current economic situation
- that is simple and certain, and
- that supports New Zealand as an internationally competitive economy.
This programme of work will assist the Government to meet its priorities of responsibly managing its finances, delivering better public services, and building a more competitive and productive economy.
The Government recognises that, over the longer term, the tax system will need to adapt to the effects of population ageing and increased international mobility of people, capital and businesses on the revenue base.
A tax policy work programme will continue to be released publicly.