Tax Working Group chairman Sir Michael Cullen has outlined in detail the scope of possible changes to the system that include changing behaviour to achieve "positive environmental and ecological outcomes".

Cullen said the tax system was now being called on to tackle water issues and the incidence of obesity. The group was set up by the Government just before Christmas and will start taking submissions from the end of April.

The former Labour Finance Minister told the International Fiscal Association in Queenstown that the group would seek the views of those "less frequently involved" in tax discussions.

This will include environmental and community NGOs, property investors' associations, and small business representatives amongst others.


There will be specific engagement strategies for Maori and for youth, Cullen said.

The group's terms of reference include such matters as fairness, promoting the long-term sustainability and productivity of the economy, supporting a sustainable revenue base to fund operating expenditure around current levels, treating all income and assets in a fair balanced and efficient manner (having special regard to housing affordability), and a progressive tax and transfer system.

He also stressed what would be excluded from the shake-up.

The exclusions from the scope included consideration of inheritance taxes, any increases in the rates of income tax or GST, a capital gains tax or any other changes to taxation that would apply to the family home or the land under it, and the adequacy of the personal tax system and its interaction with the transfer system.

Also excluded were technical matters being examined under the IRD's Business Transformation Programme.

"In my view these exclusions and limitations do not unduly restrict the ability of the Tax Working Group to undertake a comprehensive review of the tax system," Cullen said.

Even were the voice of God to emerge from the clouds telling us to have a CGT (capital gains tax) on the family home I am certain any New Zealand government would manage not to hear it.

The group would avoid repetition of work underway, while not precluding a broader consideration of the issues.

Others reflected political realities.


''Even were the voice of God to emerge from the clouds telling us to have a CGT (capital gains tax) on the family home I am certain any New Zealand government would manage not to hear it,'' Cullen said.

Tax was being suggested as a way to tackle environmental and health issues.

''We face many other environmental challenges such as water pollution, possible overallocation of water, plastic pollution of the oceans, and congestion, in Auckland especially,'' Cullen said

"At the same time, we have calls to use the tax system as a partial solution to such problems as the incidence of obesity. All this means that the possible use of the system to change people's behaviour in ways which increase the wellbeing of all of us is very much on the agenda at the present time."

He said he expected a "significant number" of submissions in that respect. He said any tax system creates large vested interests that will oppose change.

"Any change to a tax system is easily misrepresented as a tax grab, an ideological lurch, unfair, unworkable or all of these."