A visiting tax expert says goods and services taxes are a kind of privatisation of taxation and meddling Governments tend to keep raising such taxes to around 20 per cent in many countries.
Chas Roy-Chowdhury, the head of taxation for the Association of Chartered Certified Accountants, also said there are warnings
for New Zealand in revelations that nearly six million people in the United Kingdom have paid the wrong amount of tax through the pay as you earn system (PAYE).
New Zealand is increasing its Goods and Services Tax (GST) rate to 15 per cent from 12.5 per cent on October 1. It was first introduced in 1986 at 10 per cent and increased to 12.5 per cent on July 1, 1989. Australia's GST rate has stayed at 10 per cent.
Mr Roy-Chowdhury said there are pluses and minuses with GST, or value-added taxes.
"The issue in Europe and elsewhere is that once GST is introduced it is great, but it tends to start clocking up in terms of rate."
The UK value-added tax started at 10 per cent. It rose to 12.5 per cent, then to 15 per cent, then to 17.5 per cent, and on January 4 it rises to 20 per cent. In Europe many value-added taxes have risen to 20 per cent.
"It seems like a similar trend is happening in New Zealand. It is a concern that these taxes creep up."
However, GST taxes are a "light touch in terms of administration".
"The real issue is that the Government is trying to privatise the administration of the taxation system."
The move to indirect taxes from direct taxes shifts the administration of tax to the private sector. "Direct tax tends to be collected by government administrations. GST is more self-assessing. Companies do most of the work."
It was revealed at the weekend that nearly six million people in the UK have paid the wrong amount of tax through the PAYE system. The errors were made during the past two tax years and emerged because the HM Revenue and Customs is implementing a new computer system to automate the process of updating PAYE records. PAYE was introduced in the 1940s.
The frequency with which workers switch jobs today has overwhelmed the system, the Independent reported.
Mr Roy-Chowdhury said New Zealand could well have a similar problem.
People needed to ask how accurate the PAYE system was.
In the UK when self assessment came in a decade ago about eight million people filed returns out of a tax-paying population of 27 million.
A visiting tax expert says goods and services taxes are a kind of privatisation of taxation and meddling Governments tend to keep raising such taxes to around 20 per cent in many countries.
Chas Roy-Chowdhury, the head of taxation for the Association of Chartered Certified Accountants, also said there are warnings
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