NEW ZEALAND TAX OVERHAUL
April 24, 2007
An Organization for Economic Co-Operation and Development (OECD) report on the New Zealand economy has called for a major overhaul of the taxation system, says the New Zealand Herald.
According to the report:
- New Zealand's economy faced an uncertain future, with low household savings and strong inflationary pressure.
- In addition, living standards were lagging behind other developed countries -- 16 percent below the OECD median for some years.
The report also offered suggestions for an improved tax scheme:
- Lowering the top tax rates and increasing Goods and Services Tax (GST) to compensate.
- Instituting a capital gains tax to reduce the country's reliance on property as a savings vehicle.
- Raising the age of eligibility for universal superannuation (pension) and reducing its value in real terms over time.
But acting Finance Minister Trevor Mallard said the report read at times like a National Party manifesto and the Government would not be implementing the suggested tax changes. Further, he said the Government had already moved to address projected future superannuation problems, caused by a bulge in the ageing population, by setting up the Government Superannuation Fund.
Source: "Raise GST to boost living standards - report," New Zealand Herald, April 24, 2007; based upon: "Economic Survey of New Zealand: 2007," Organization for Economic Co-Operation and Development, April 23, 2007.
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