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Budget 2015 Home Page Fiscal Strategy Report - Budget 2015

Crown Revenue

The tax system should be as fair and efficient as possible in raising the revenue required to meet the Government's needs. The Government supports a broad-base, low-rate tax system that responds to New Zealand's medium-term needs in a planned and coherent way, minimises economic distortions, rewards effort, has low compliance and administrative costs and minimises opportunities for tax avoidance and evasion. Further details on the Government's revenue strategy can be found at http://www.treasury.govt.nz/government/revenue/strategy

A comprehensive review of New Zealand's tax system was undertaken in 2009 which led to major tax reforms, including a reduction in all personal tax rates, a reduction in the company tax rate, stricter rules around property and an increase in goods and services tax. The Government considered, and rejected, other potential tax changes such as a widespread capital gains tax.

The current tax policy work programme focuses on three areas:

  • Ensuring that the main tax bases (personal income, corporate income and consumption) are a stable basis for revenue. Work will continue to ensure that these tax bases are applied fairly and as evenly as possible.
  • Ensuring that New Zealand receives its fair share of revenue from businesses operating in New Zealand and from consumption occurring here. Legitimate concerns have been expressed over large multinationals exploiting the differences between tax jurisdictions to pay minimal tax and also over the taxation of overseas purchases of intangibles and low-value goods.
  • Using the Inland Revenue Department's Business Transformation programme to bring New Zealand's tax administration into the 21st century. In particular, changes in technology create opportunities to make it easier and less costly for individuals and businesses to comply with their tax obligations.

The Government is also committed to a modest reduction in income tax rates and/or changes to thresholds, when that is affordable and when economic conditions permit.

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