In an address to the Young International Fiscal Association on 8 August 2019, the Finance Minister and the Revenue Minister discussed aspects of the Government's updated tax policy work programme for the next 18 months. The work programme aims to support the Government's objectives to improve the living standards and wellbeing of all New Zealanders. The 2019–20 work programme contains tax policy measures that the Government considers most likely to enhance productivity and increase the fairness of the tax system.
In a press release on 8 August 2019, the Minister of Revenue, the Hon Stuart Nash, said that the tax policy work programme (TPWP) required an update following the release of the Tax Working Group (TWG) report in April 2019. The TPWP was last produced in May 2018.
The Minister said that the refreshed TPWP reflects the need to encourage productive investment and ensure the tax system remains sound. It highlights the government's intention to deal with land speculation and land banking. It prioritises the need to address tax barriers to investment in infrastructure and to reduce compliance costs for business.
The TPWP is grouped under a number of workstreams reflecting the government's priorities. Key workstreams include:
•Land: Policy work will continue the review of current land rules, particularly affecting investment property and speculation, land banking, and vacant land. It will ensure that the current tax settings are fair and encourage investment where it is most productive. Enforcement of the current tax rules is also a priority.
•Business:The government is focussed on ways to enhance economic performance and minimise the impact of the tax system on businesses. This includes the tax treatment of spending on innovation. It covers feasibility and blackhole expenditure, or capital spending that is not otherwise deductible. Work will also focus on minimising compliance costs for businesses, and lifting the economic performance of all businesses, especially smaller firms and the self-employed. It also considers employment matters in the face of the changing nature of work.
•International:This work stream considers options for the digital economy and reflects growing public and government concern at the tax treatment of multinationals who earn income in New Zealand. The government has not made any decisions on whether to adopt a digital services tax. Its preference remains a multilateral approach through the OECD.
•Infrastructure:Infrastructure is a key area of interest for the coalition government. The project will consider whether the tax system has a role driving infrastructure investment.
•Exemptions and charities:The government is driving a focus on consistency and coherence in New Zealand's tax frameworks. This includes entities such as charities and businesses run for charitable purposes, as well as institutions like local authorities and state-owned enterprises. The work programme also includes a charities workstream. This work links to the charities project underway at the Department of Internal Affairs.
•Social policy:This workstream supports the welfare overhaul including reform of Working for Families, the student loan scheme and KiwiSaver.