Patrick Smellie at Stuff reports:
For one of the most fearsome tax minds in the country, departing deputy Inland Revenue Department commissioner Robin Oliver is more imp than ogre.
Robin has been head of policy for IRD for many years, and is hugely respected.
His views on what makes tax policy work are carbon copy Roger Douglas, but he can just as easily whip up a good line in class warfare when describing the kind of social balance a tax system must achieve to succeed.
Grinning, he illustrates a point by asking whether it would be “acceptable for me to retire with international investments, sit on a beach paying almost no tax and using the health system, while some family in South Auckland pays enormous taxes, working double shifts cleaning offices”.
And receiving non means tested NZ super!
His proudest moment was when a meeting of New Zealand businesspeople and accountants rejected the previous government’s research and development tax credits as bad policy.
“All the big four [accounting firms] had to pay off staff and close parts of their businesses, but they never lobbied to keep [the tax credits] because it wasn’t right in their view.”
Yes, I suspect schemes such as R&D tax credits create huge amounts of work for accountancy firms, as companies reclassify expenditure to qualify for the tax credits, It probably creates a mini-industry around how to gain the tax credits.
Mr Oliver says the big tax issues don’t change much over time – the rate, concessions versus broad base, tax everyone or only some people – and there are still only three places to turn for tax: labour income, capital income and land.
Yet he defends the lack of New Zealand capital gains and land taxes.
“It’s not purist, just a practicality,” he says, noting that IRD changed from advocating capital gains to believing it couldn’t be done efficiently.
“No one taxes the family home and, in New Zealand, what do you do about farming? The common farming career progression is to trade to larger farms. A capital gains tax would kill that. What would you do about communally owned Maori land? Capital taxes are levied at death. You can’t tax Maori land that way.”
The alternative is a capital gains tax as complex as Australia’s, where “they have whole conferences on what should be in and what should be out”.
Labur are thought to be considering proposing a capital gains tax. If they do, and win the election, I predict great times for the tax industry as lawyers and accountants prosper.
I do believe a land tax has some merit, so long as it is not about increasing the overall level of taxation.