Will the nation need new taxes? New Zealand Herald File Photograph.
As the billions of dollars being deployed to manage the Covid-19 pandemic mount, questions remain about how we cover the cost.
Are new taxes inevitable?
The Green Party has proposed a wealth tax.
But other options could include a "covid levy" targeting top earners, a GST increase, or another look at how we tax property, says Professor Craig Elliffe from the University of Auckland Faculty of Law.
Indications are that Labour isn't planning anything radical in its tax policy plans for the upcoming election
Finance Minister Grant Robertson has said he thinks current tax settings are "fair and balanced".
Perhaps it's simply too soon to confront it, says Elliffe, but New Zealand simply can not avoid discussion about significant tax changes.
Forecast borrowing will see crown debt rise by about 30 per cent of GDP, from the pre-Covid position of about $55 billion to $200 billion.
"That means we have an immediate issue in terms of revenue and expenditure," Elliffe says.
"We're also going to have a longer term issue as our demographic ages , the spending goes up and the income goes down."
All governments around the world are borrowing more to cope with Covid-19, he says.
"All governments around the world will be looking at, do they increase there taxes, do they try and repay their debt or do they just leave things the way they are."
"It seems to me that it is kind of nonsensical to say we'll keep taxes exactly the same," he told The Economy Hub video show.
"The only way you can come to that conclusion is that you're going to under spend.
Elliffe says he suspects there is much less tolerance towards cutting public spending as a result of the Covid crisis.
"We don't want to see our hospitals under funded and we don't want to see health workers under paid."
But eventually the higher debt does become a problem that needs to be addressed.
"One of the problems is that interest expense of borrowing doesn't go away," he says.
"If interest becomes a large component of the budgetary spend, if it starts to be equivalent what you spend on law and order - your police and courts - then you start to have to make further choices. You can't always keep on borrowing."
So what are New Zealand's tax options?
Elliffe has been Critical of the Green Party Wealth Tax policy.
"Wealth taxes are not popular, not just politically but in terms of their use globally, he says.
And that raises all sorts of problems in terms of competitiveness with other jurisdictions.
"Thirty years ago there were 12 jurisdictions in the OECD with wealth taxes. Now there are only three," Elliffe says.
"It's pretty easy for wealthy people to move jurisdictions if they wish to or move their assets if they out of a jurisdiction that has a wealth tax."
But there are other options we could consider.
We could look to familiar levers, such increasing to GST, he says.
However that was generally seen as undesirable as it's a regressive tax.
It hits poorer people harder because they have to spend a higher percentage of their weekly income just to get by.
We could increase the top marginal increase tax rate.
"That is a possibility." Elliffe says "We could have a covid levy for want of a better [term] some jurisdictions have done that with other natural disasters."
One of the problems with that would be that it can cause issues with the corporate tax rate and out Trust tax rate, he says.
The other alternatives is to look at the areas in our base that are currently untaxed.
Elliffe was a member of the Tax Work Group that recommended a Capital Gains Tax - and still sees it as the most logical path for New Zealand.
"New Zealand has had a fantastic mantra that everyone has bought into which is that we should have a broad base. And a low rate," he says"
"The problem is we don't really a have very broad base."
The Tax Working Group's CGT was ruled out by the current Government, with Prime Minister Jacinda Ardern going further and ruling it out while she is in power.
"Perhaps I should say that the Tax Working Group we were looking forward to the demographic problem of the aging society," Elliffe says.
"So it was surprising that it would be rejected completely as a proposal."
But there are other property tax alternatives that could be considered.
"The alternatives would be to do something like a risk free return method on residential property, with an imputed return."
"We already have that system operating in our foreign investment tax regime. So when people have overseas investments they pay tax on them, imputed at a fair dividend rate."
So the property tax debate may not be dead yet, although Elliffe notes, we've been talking about it for 60 years with no real progress.
"Opponents need to understand that we are the only country in the OECD that doesn't have it," he says.
Ultimately New Zealand just can't avoid a serious discussion about tax policy, he says.
"We just have to have the debate - that every country in the developed world has to have - in the next 5 years."