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The Tax Working Group is an advisory body that was created by the New Zealand Government in late 2017 to investigate ways of reforming New Zealand's taxation system and making it "fairer." Some key areas under its purview include the Goods and Services Tax and alleviating the housing market. The Working Group is headed by former Finance Minister Sir Michael Cullen. [1] [2]
The Tax Working Group was established on 20 December 2017 with the stated goal of "examine further improvements in the structure, fairness and balance of the tax system." The Working Group will report to the New Zealand Government on the following matters:
The Tax Working Group's responsibilities includes:
Areas outside the purview of the Working Group include: increasing any income tax or the GST rate; inheritance tax; the taxation of the family home or the land under it; the adequacy of the personal tax system and its interaction with the transfer system; and technical matters such as international tax reform under the base erosion and profit shifting agenda and policy chances as part of the Inland Revenue Department's Business Transformation programme. [4]
Following the formation of a new Labour-led coalition government in the weeks after the 2017 general election, Prime Minister Jacinda Ardern announced that the incoming government would establish a Tax Working Group under its 100-day plan. [5] On 23 November, it was announced that former Finance Minister Sir Michael Cullen would be heading the Working Group. While the Tax Working Group would have a mandate over New Zealand's taxation system, it was directed to look at specific areas including the Goods and Services Tax and alleviating the housing market. While the Working Group would not have the power to change the GST rate, it would be able to advise on removing or adding GST to certain goods such as female hygiene products, fruits, vegetables, and "basic food items." [1]
On 20 December, the New Zealand Government announced that the Tax Working Group would consist of a mixture of individuals from various backgrounds including academics, tax experts, and people with private sector, union, and Māori community experiences. In addition to its Chair Sir Michael Cullen, other Working Group members would include:
The Tax Working Group is due to hold its first meeting at the end of January 2018. [2]
In mid-February 2019, the Tax Working Group recommended that the New Zealand Government implement a capital gains tax (CGT) and use the revenue generated to lower the personal tax rate and to target polluters. This proposed capital gains tax would cover assets such as land, shares, investment properties, business assets and intellectual property. It proposed setting a tax rate of 33% at the income-earner's top rate level. The Tax Working Group also proposed raising social welfare net benefits to allow low-incomer earners to cope with to post-tax threshold adjustments. However, other assets such as family homes, cars, boats and art would be exempt from the CGT. Tax Working Group Chairman Cullen claimed that the capital gains tax would raise NZ$8.3 billion over the next five years. [6] [7]
Finance Minister Grant Robertson and Revenue Minister Stuart Nash welcomed the Tax Working Group's recommendations. Robertson said that the Labour Party would seek to build a consensus with its coalition partners New Zealand First and the Greens. Nash also praised the Tax Working Group for identifying weaknesses in the country's taxation system and said that the report presented the government with options on tackling it. Government spokespersons also said that they would study the report and inform the public if they were introducing a capital gains tax by April 2019. [6]
Opposition Leader Simon Bridges of the National Party criticized the proposed capital gains tax as an assault on the "Kiwi way of life" and vowed to fight it every step of the way. Similarly, National's Finance Spokesperson Amy Adams claimed that the Tax Working Group was proposing a massive tax grab that would hurt the New Zealand economy and taxpayers. [8] Businesses, landlords, and farmers have objected to the proposed tax while trade unions including the New Zealand Council of Trade Unions and environmental groups have expressed support for the proposed CGT. [9] [10]
On 17 April, the Coalition government announced that it would not be introducing a capital gains tax. Members of the ruling coalition were unable to reach a consensus on the issue. Opposition Leader Bridges criticized the capital gains tax debate for wasting taxpayer funds and weakening the New Zealand economy by undermining business confidence. [11] [12] [13] [14]
A tax is a mandatory financial charge or levy imposed on a taxpayer by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax compliance refers to policy actions and individual behavior aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation occurred in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes and may be paid in money or as labor equivalent.
A dividend tax is a tax imposed by a jurisdiction on dividends paid by a corporation to its shareholders (stockholders). The primary tax liability is that of the shareholder, though a tax obligation may also be imposed on the corporation in the form of a withholding tax. In some cases the withholding tax may be the extent of the tax liability in relation to the dividend. A dividend tax is in addition to any tax imposed directly on the corporation on its profits. Some jurisdictions do not tax dividends.
Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares.
A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property.
In Canada, taxation is a prerogative shared between the federal government and the various provincial and territorial legislatures.
In the United Kingdom, taxation may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2023–24, total government revenue was forecast to be £1,139.1 billion, or 40.9 per cent of GDP, with income taxes and National Insurance contributions standing at around £470 billion.
Goods and Services Tax (GST) in Australia is a value added tax of 10% on most goods and services sales, with some exemptions and concessions. GST is levied on most transactions in the production process, but is in many cases refunded to all parties in the chain of production other than the final consumer.
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Income tax in Australia is imposed by the federal government on the taxable income of individuals and corporations. State governments have not imposed income taxes since World War II. On individuals, income tax is levied at progressive rates, and at one of two rates for corporations. The income of partnerships and trusts is not taxed directly, but is taxed on its distribution to the partners or beneficiaries. Income tax is the most important source of revenue for government within the Australian taxation system. Income tax is collected on behalf of the federal government by the Australian Taxation Office.
Taxes in New Zealand are collected at a national level by the Inland Revenue Department (IRD) on behalf of the New Zealand Government. National taxes are levied on personal and business income, and on the supply of goods and services. Capital gains tax applies in limited situations, such as the sale of some rental properties within 10 years of purchase. Some "gains" such as profits on the sale of patent rights are deemed to be income – income tax does apply to property transactions in certain circumstances, particularly speculation. There are currently no land taxes, but local property taxes (rates) are managed and collected by local authorities. Some goods and services carry a specific tax, referred to as an excise or a duty, such as alcohol excise or gaming duty. These are collected by a range of government agencies such as the New Zealand Customs Service. There is no social security (payroll) tax.
Income taxes are the most significant form of taxation in Australia, and collected by the federal government through the Australian Taxation Office (ATO). Australian GST revenue is collected by the Federal government, and then paid to the states under a distribution formula determined by the Commonwealth Grants Commission.
The goods and services tax (GST) was a proposed value-added tax in Hong Kong. Consultation over a period of nine months was launched on 19 July 2006 and stirred considerable controversy.
Goods and Services Tax (GST) in Singapore is a value added tax (VAT) of 9% levied on import of goods, as well as most supplies of goods and services. Exemptions are given for the sales and leases of residential properties, importation and local supply of investment precious metals and most financial services. Export of goods and international services are zero-rated. GST is also absorbed by the government for public healthcare services, such as at public hospitals and polyclinics.
Dame Jacinda Kate Laurell Ardern is a New Zealand politician who served as the 40th Prime Minister of New Zealand and leader of the Labour Party from 2017 to 2023. She was a member of Parliament (MP) as a list MP from 2008 to 2017 and for Mount Albert from 2017 to 2023.
The 2017 New Zealand general election took place on Saturday 23 September 2017 to determine the membership of the 52nd New Zealand Parliament. The previous parliament was elected on 20 September 2014 and was officially dissolved on 22 August 2017. Voters elected 120 members to the House of Representatives under New Zealand's mixed-member proportional (MMP) voting system, a proportional representation system in which 71 members were elected from single-member electorates and 49 members were elected from closed party lists. Around 3.57 million people were registered to vote in the election, with 2.63 million (79.8%) turning out. Advance voting proved popular, with 1.24 million votes cast before election day, more than the previous two elections combined.
The Goods and Services Tax (GST) is a successor to VAT used in India on the supply of goods and service. Both VAT and GST have the same taxation slabs. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes.
A value-added tax is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared with, a sales tax. VAT is an indirect tax, because the consumer who ultimately bears the burden of the tax is not the entity that pays it. Specific goods and services are typically exempted in various jurisdictions.
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Capital gains tax in the United Kingdom is a tax levied on capital gains, the profit realised on the sale of a non-inventory asset by an individual or trust in the United Kingdom. The most common capital gains are realised from the sale of shares, bonds, precious metals, real estate, and property, so the tax principally targets business owners, investors and employee share scheme participants.