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Towards a Practical Cash-Flow Tax - WP 99/01

Publication Details

  • Towards a Practical Cash-Flow Tax
  • Published: Mar 1999
  • Status: Current
  • Author: Katz, Dieter
    • Hard copy: Available in PDF format only.

    Towards a Practical Cash-Flow Tax

    New Zealand Treasury Working Paper 99/01

    Published Mar 1999

    Author: Dieter Katz 


    There is a wide consensus amongst economists that a cash-flow tax, in concept, is superior to an income tax. The most difficult problem is the transition, which can create either a huge fiscal cost, very large compliance costs or economic dislocation. This paper explores a set of rules that could potentially avoid economic disruption yet keeps fiscal and compliance costs to a manageable level. Features are a general tax exemption for interest and dividends, a cash-flow tax for increments to the existing capital invested in business activities and continuation of income tax rules for existing capital. The paper identifies general areas where further development of the rules is required.

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