Parties see positives and negatives in report

Labour finance spokesman David Cunliffe urged the Government to be cautious about its response to the tax review, saying "any policy changes must be fair to all New Zealanders and not skewed to the privileged few".

"In seeking to achieve improved coherence and sustainability, the Government must not sacrifice equity," Mr Cunliffe said. "We need a positive future for all New Zealanders, not just those in the top tax rate."

Mr Cunliffe said any response should strengthen the productive economy, promote innovation, remove unfair tax loopholes and move toward tax neutrality between asset classes.

He said Labour would be "extremely cautious" about a rise in GST because it did not believe the Government would be thorough enough in its offsetting tax changes to avoid it being regressive at a time when many people had had a tough time during the recession.

He said Labour would take time to look at the report.

Greens co-leader Russel Norman said his party supported a targeted strategy to close the loopholes that allowed tax avoidance through company and trust vehicles, and which were identified by the tax working group. He said the work group's recommendation of aligning top personal tax rates with a corporate tax rate would "create a chasm of social inequality between the richest and poorest in New Zealand".

Business NZ and the Council of Trade Unions participated in some of the sessions of the tax working group.

Business NZ chief executive Phil O'Reilly welcomed the recommendation to align company tax with the top personal and trust tax rates. But he said the proposed land tax would be "an anti-competitive cost on New Zealand's many land-based enterprises".

He welcomed the call for a comprehensive review of welfare policy and how it interacted to the tax system.

CTU secretary Peter Conway said cutting the top personal tax rate should not be a priority and the CTU was completely opposed to raising GST.

He said the CTU supported forms of capital gains tax except on private homes. He believed that action "must be taken to address the current situation where $220 billion of investment property gets a tax credit of around $500 million".

Federated Farmers spokesman Phillip York said there should be more focus on growing the New Zealand economy rather than how to slice "our tax pie even smaller".

He supported a 27 per cent top personal tax rate and aligning it with company and trust tax but said it should be funded through savings in Government spending.

Tourism Industry Association chief executive Tim Cossar said that while parts of the tax system needed overhauling, increasing GST to 15 per cent would have implications for the pricing of New Zealand tourism products.