Latest / Early Edition with Ryan Bridge / Sandy Lau: PWC Partner on the call for countries to ensure their tax systems are fair

Transcript

Sandy Lau: PWC Partner on the call for countries to ensure their tax systems are fair · Early Edition with Ryan Bridge

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  Speaker 1: A United Nations committee has questioned the fairness of world
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  Speaker 1: tax systems and GST and New Zealand system. A statement
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  Speaker 1: from the Committee for Economic, Social and Cultural Rights calls
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  Speaker 1: for countries to check the taxes being applied proportionally to
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  Speaker 1: the wealthiest individuals, and it says countries could focus on
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  Speaker 1: more direct income taxation rather than taxes like our GST,
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  Speaker 1: and they should tax large companies, particularly multinationals. So I've
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  Speaker 1: got the partner from PwC, Sandy down with me right now,
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  Speaker 1: good one to your Sandy.
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  Speaker 2: Good morning Andrew.
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  Speaker 1: So the UN says tax policies could disproportionately affect low
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  Speaker 1: income households, women and disadvantage groups.
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  Speaker 2: How look, I think the topic around fairners and the
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  Speaker 2: tax system is not a new one, and in particular
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  Speaker 2: you'll probably remember there was quite a lot of discussion
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  Speaker 2: around this in New Zealand in twenty twenty three, where
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  Speaker 2: in then Revenue that a research project on the high
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  Speaker 2: wealth individuals and where they found that group there effective
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  Speaker 2: tax rate across their economic income was around nine percent,
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  Speaker 2: while the average income family was about around twenty percent.
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  Speaker 2: But it's not as simple as looking at the tax
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  Speaker 2: rate across different income levels. While the idea of sen
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  Speaker 2: is important, we also need to make sure that the
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  Speaker 2: tax system doesn't create additional barriers for economic growth. So
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  Speaker 2: there's a little bit more nuanced than that than just saying,
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  Speaker 2: you know, we want to increase our corporate tax rate
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  Speaker 2: while putting a higher personal tax rate, because in the
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  Speaker 2: front of corporate tax rate, our company tax rate needs
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  Speaker 2: to be competitive so that we can attract that really
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  Speaker 2: important foreign investment in New Zealand as well. So it's
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  Speaker 2: really a case of growing the pie is probably likely
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  Speaker 2: to be better for everyone. So it's important when we
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  Speaker 2: think about our tax system we don't end up with
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  Speaker 2: one that creates more barriers for us to achieve that growth.
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  Speaker 1: True enough, enough, the fundamental foreign our economy though, is
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  Speaker 1: that the government does not have enough revenue to sustain
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  Speaker 1: our development, just to fund you know, just a business.
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  Speaker 1: So politicians are reticent to get rid of GST. The
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  Speaker 1: question is and what this UN committee asked, should they?
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  Speaker 2: Yeah? Now, the GST one is an interesting angle because
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  Speaker 2: from New Zealand's perspective, our GST system is often seen
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  Speaker 2: as world class, and that's because it applies so broadly
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  Speaker 2: and at pretty much everything. At the same rate. So
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  Speaker 2: there is a very efficient tax and as you alluded to,
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  Speaker 2: it does bring in quite a lot of taxes collected
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  Speaker 2: for New Zealand. It's about a quarter of it so
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  Speaker 2: over the last years around twenty nine billion dollars. It's
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  Speaker 2: not small bookies, And I guess the key question is
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  Speaker 2: that it's not as simple as just reducing that GST
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  Speaker 2: rate or maybe we will record discussions around it making
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  Speaker 2: certain things GST free, because one that's very expensive and
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  Speaker 2: to the other things that's not very well targeted. And
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  Speaker 2: it's not really entirely clear from evidence that that whether
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  Speaker 2: that reduction will get pass on to your end customers,
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  Speaker 2: which is your lower income households and things like that.
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  Speaker 2: But there might be something in it because GS is
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  Speaker 2: quite regressive. It can be regressive, and so looking at
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  Speaker 2: how we make that more progressive could be a good idea.
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  Speaker 1: So Andy, thank you so much for your thoughts and
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  Speaker 1: your expertise. Today. For more from earlier edition with Ryan Bridge,
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  Speaker 1: listen live to News Talks it'd be from five am weekdays,
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