Former MP and Kiwi Party spokesperson on taxation Gordon Copeland today released his Party’s response to the Tax Working Group’s Report ahead of Prime Minister John Key’s response next Tuesday.

He agrees with some of the recommendations but disagrees with others.

1 The top personal rate of tax should be aligned with the trust rate to stop the rort.

2 The current loopholes in Working for Families should be fixed but income splitting for couples with dependent children should be introduced.

3 The current tax regime on residential properties must come to an end but should not be replaced with a notional return system. Rather depreciation should only be deductable if the value of the property declines.

4 The personal tax thresholds should be aligned with those in Australia, less 2 cents*, rather than reduced to a top rate of 30%. If the Government bangs on about trans-Tasman tax harmonisations then why not do it?

*at 2cents in the dollar below Australia the New Zealand tax scale would be as follows:
$0 to $6,000               Nil
$6,001 to $35,000      14.5 cents
$35,000 to $80,000    29.5 cents
$80,000 to $180,000  37.5 cents
$180,000 +                  44.5 cents

N.B. the Australian GST rate is 10% vs. NZ at 12.5%

5 The proposed 2.5% increase in GST, taking it up to 15% (compared to 10% in Australia-they must be joking!), is unaffordable for families and those on low incomes & should not proceed.  It is only proposed because the Working Group want to reduce the top personal rate to 30 cents; a huge wealth transfer to the better off at the expense of families & the retired. GST should be removed from rates.

6 The company tax rate should be lowered to incentivise reinvestment.  The 8 cent gap between the top personal rate and the PIE rate should be reduced to 3 cents but not eliminated, to incentivise long term savings.

7 The land tax proposal should not proceed. We already have a land tax. It is called “rates”.

8 The special 20% tax rate on new plant & equipment should be removed.