Tax cuts in the election year are possible, Finance Minister Grant Robertson said this morning.

While not committing to reducing income tax in 2020, Robertson didn't rule out the move in an interview with Newstalk ZB's Mike Hosking.

His comments followed Sir Michael Cullen's Tax Working Group releasing an interim report that fell firmly in favour of broadening the existing range of capital gains taxes to capture profits on the sale of a wider range of assets

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An expanded CGT could include: residential land other than under a family home, commercial, agricultural, industrial and leasehold interests and shares in companies.

That would likely increase tax revenue going to the Government.

Robertson has indicated he wants final recommendations from the Tax Working Group (due February) to be revenue neutral.

This means any gains made on new taxes would have to be offset with tax cuts.

This morning, Robertson said tax cuts in election year were "a possibility".

"One of the things we've written and asked the group to do is to come back to us with a package which is as we say revenue neutral so the amount of tax in the system as whole doesn't change," Robertson said on NewstalkZB.

"Our goal is to create a better-balanced tax system that implies that you can shift in some areas down and up in others."

Asked if that meant tax cuts in election year, Robertson said: "That would be one possibility... I'm not committing to that today."


Charged with the task of adding fairness to the tax system the report effectively rules out cuts to the top personal income tax rate, however, cuts to the lower tax rate remain on the table.

The Tax Working Group warns against the high cost of an across-the-board cut to GST - noting a loss of about $2 billion a year if it were cut from 15 per cent to 13.5 per cent.

But the possibility remains live - as does the potential of removing GST on fresh fruit and vegetables.

The company tax rate is also considered. While the TWG appears not to favour a cut to the current rate it does indicate scope for cutting small business compliance costs by adjusting the thresholds.

It also considers the possibility of a progressive company tax rate – with a lower rate for smaller businesses (a system already in place in Australia).