"This is a sad outcome for all of those New Zealanders who still hold to the valid belief that a capital gains tax would make a huge difference to bringing some genuine fairness to our out-of-step tax system", say PSA national secretaries Glenn Barclay and Kerry Davies.
"It is extremely disappointing that the conclusion was reached that there is no appetite for implementing some form of capital gains tax. That was certainly not the opinion of the majority of the Tax Working Group, nor a number of New Zealand’s leading economists, nor a large cross-section of community interests and ordinary citizens who were gaining a voice through networks such as Tax Justice Aotearoa New Zealand.
"The concerning legacy of this decision is that it represents an opportunity cost in terms of limiting the tax revenue base that New Zealand needs to meet future demands to sustain and grow necessary services.
"Given the government’s lack of ability to take truly bold action on tax reform and the current unwillingness to break the shackles of current Budget Responsibility Rules the PSA is anxious to see what this year’s Budget will deliver to underpin how to cover the costs of meeting the wellbeing needs of all New Zealanders - most especially those who are struggling to make ends meet and do not have the luxury of untaxed capital gains.
"While today’s announcement has promised that more targeted measures will be taken to advance more fairness in the tax system, it is difficult to see what can in any way replace what could have been achieved by having the courage to introduce a capital gains tax. Instead today's decision just leaves the way open for persistent wealth inequality in New Zealand to go unchecked".
See also: Tax Working Group delivers effective ways to neutrally broaden tax base
The final report of the Tax Working Group finally puts together a long overdue set of choices and options for the Government to act on to achieve a tax system that is fairer for all New Zealanders says the Public Services Association (PSA).
"The Future of Tax report and the supporting design details it delivered today underlines undeniable facts like the fact that New Zealand’s tax system has relied on a relatively narrow range of taxes for far too long and, as found by the Tax Working Group, is not a particularly progressive system," says Glenn Barclay, PSA national secretary.
"The PSA supports and commends the group’s finding that the inconsistent treatment of capital gains only serves to perpetuate the unfairness of the tax system, leaving us with a society where wealth is increasingly concentrated in a smaller percentage of the population.
"The time is right to put this on the table once and for all, and for the government to ensure that all necessary steps are taken to put a detailed framework for capital gains taxation into place as soon as possible based on the work done by the Tax Working Group.
"The PSA is equally heartened by the investigation the Tax Working Group has done in areas such as personal income tax, and the option it has put forward to allow more New Zealanders to earn more at the lowest tax rate of 10.5% to reduce income inequality".
Kerry Davies, PSA national secretary: "This is a balanced and comprehensive report that recognises the Group’s consideration of the fundamental proposition that there are three main ways in which the tax system supports the wellbeing of New Zealanders: as a fair and efficient source of revenue; as a means of redistribution; and as a policy instrument to influence behaviours.
"We believe the direction announced today, when carried forward into a comprehensive tax package, delivers an answer towards levelling the playing field in priority areas like housing where PSA members who face insecure housing choices have been negatively impacted.
"It also sets the scene for allowing environmental taxes to play a greater role in sustaining and enhancing New Zealand’s natural capital, and draws attention to a need to build more institutional capability to design and implement new environmental taxes.
"In addition we strongly support the comments made by Group chair Sir Michael Cullen at today’s report launch that the success of changes to the tax system will depend on sufficiently resourcing the capability and workforce at Inland Revenue - so that it invests in staff and doesn’t lose staff it will require in the future".
Glenn Barclay and Kerry Davies: "We now urge the government to unlock the opportunities set out by the Tax Working Group to elevate the New Zealand economy as a whole and bring it more into line with fairer and more effective tax and transfer systems in the OECD, including our nearest neighbour Australia".