By Merepeka Raukawa-Tait
Now that the Capital Gains Tax (CGT) has been given the boot, at least while our Prime Minister is leading the country, I still hope some of the recommendations in the report by the Tax Working Group headed by Sir Michael Cullen will be considered.
The Minister of Finance, Grant Robertson, has indicated he would look at the recommendations to see if some might be helpful in making our tax system fairer. We may not get a full-blown CGT, but I hope we might yet see some changes to our tax system over the next few years. To make it fairer.
I can't recall who said, "it is everyone's duty to pay as little tax as possible". Big business, in particular, took the message to heart. Have done so over many years.
They, their accountants and lawyers do everything they can to avoid paying their share of taxes. They think paying their fair share of tax is somehow wrong. Not only wrong but to be avoided at all costs.
They want to determine what fair is. And that's what they'll pay. And it's not only big business but anyone with wealth-generating assets, benefits when tax liabilities are not fair.
The Tax Working Group discovered 10 per cent of our population owns 70 per cent of the assets that stood to be taxed, while the bottom 70 per cent have only 10 per cent of such assets. And 30 per cent of the lowest income earners have merely 1 per cent. So it is the wage earner who will continue to pay their fair share of tax, not the top 10 per cent.
New Zealand is one of the few countries in the world that does not have a Capital Gains Tax. In other countries, CGT is viewed as helping to create a fairer tax system.
Denmark has the highest CGT rate at 42 per cent. The Tax Working Group proposed New Zealand's be set at 33 per cent. What I currently pay now in income tax. So what benefits do these countries see that New Zealand doesn't? A fairer system of taxation and income distribution.
There's no doubt about it taxation gets people going. If you're a wage earner you know what you're up for, there's not much wriggle room. Most people in business get their accountant to look after their tax obligations. Deduct as much as possible for business expenses and if not a tax refund, then pay as little tax as possible.
In America, there has been strong opposition to some of their biggest companies paying little or no taxes at all. Companies are being called out, "tax shaming".
Some are being called immoral for taking advantage of tax loopholes. But the politicians are also being called immoral for creating these loopholes in the first place and not closing them.
Paying taxes is a certainty.
New Zealand has a small working population in a low-wage economy. We also have a social welfare support system that requires billions of dollars each year to sustain it.
It's our taxes that provide the services that the Government delivers. We can complain about the poor conditions of some of our main highways and roads, the need for more police officers, the waiting lists in our hospitals, inadequate social housing and the poor state of some of our school buildings.
But without an adequate tax take, there will always be unfinished business in the services provided by the Government. Later this month the Government will present its Budget. We'll hear then cries of "not enough" "should have been more".
But the Government has only one option. Embrace taxation reality and deal with it.
Merepeka Raukawa-Tait is a Rotorua district councillor, Lakes District Health Board member and chairs the North Island Whanau Ora Commissioning Agency. She writes, speaks and broadcasts to thwart political correctness