Latest / Early Edition with Ryan Bridge / Geof Nightingale: Independent Tax Expert on Inland Revenue's recommendation to raise taxes

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Geof Nightingale: Independent Tax Expert on Inland Revenue's recommendation to raise taxes · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Inland Revenue reckons we're not paying enough tax. Well, actually
• 0:02
  Speaker 1: Treasury reckons we're not paying enough tax. And then Inland
• 0:05
  Speaker 1: Revenue has set out some ways that we might get
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  Speaker 1: more of it, floating higher GST in capital gains tax.
• 0:10
  Speaker 1: This is their latest long term insights briefing. Jeff Nightingale,
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  Speaker 1: independent tax expert, with me this morning.
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  Speaker 2: Hey Jeff, good morning Ryan.
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  Speaker 1: How much more tax are they going to take us
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  Speaker 1: off us?
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  Speaker 2: Potentially a lot? Yeah, I mean, what Inland Revenue's done
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  Speaker 2: is set out options to raise higher tax revenues in
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  Speaker 2: the future. It's not necessarily recommending them. It's just saying,
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  Speaker 2: if you need more tax revenue, this is what you
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  Speaker 2: might do. But it's doing that in the face of
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  Speaker 2: our long term fiscal forecasts, which is structural deficits. The
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  Speaker 2: government's spending more money than it's actually raising and so
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  Speaker 2: that's that's the thing that's responding to, How.
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  Speaker 1: What can we not cut our way out of this problem?
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  Speaker 2: Yes we can. Yeah. So if a government spends more
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  Speaker 2: than it takes in and revenue, it's got a deficit.
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  Speaker 2: And that deficit can only be filled in three ways, really,
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  Speaker 2: and there's only three tools you can borrow, which is
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  Speaker 2: what we're doing at the moment, and that, of course
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  Speaker 2: is not sustainable. We end up with huge debt. You
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  Speaker 2: can can't expenditure or you can raise taxes. Al most
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  Speaker 2: likely you need a combination of two of those things,
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  Speaker 2: cutting extendits and raising taxes and inland revenues. Looking at
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  Speaker 2: the raising taxes side.
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  Speaker 1: Of that equations, it's interesting when they look at the
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  Speaker 1: income tax rate. You know that top income tax rate
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  Speaker 1: thirty nine percent, and then you've got your company tax rate,
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  Speaker 1: which is twenty eight percent, and you've got people who
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  Speaker 1: are funneling what should be personal income into a company
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  Speaker 1: because you get the lower rate. But you can't really
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  Speaker 1: avoid that, can you.
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  Speaker 2: No, that is a phenomenon, And there's an even greater
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  Speaker 2: phenomenon that they point out, and perhaps that's people funneling
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  Speaker 2: income or converting income into untaxed capital gains. So going
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  Speaker 2: from thirty nine to effectively zero, But that's a very
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  Speaker 2: hard thing to solve unless you've got a flat tax rate,
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  Speaker 2: and unless you use a pretty high number, the flat
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  Speaker 2: tax rate doesn't raise enough revenue. So what would it what.
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  Speaker 1: Would it need to be, Jeff, if we did go
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  Speaker 1: with that stream of a flat tax rate.
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  Speaker 2: Yeah, I mean with a flat tax rate, what you
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  Speaker 2: do is reduce the top personal rate and you increase
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  Speaker 2: other rates, and it probably needs to be about thirty
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  Speaker 2: thirty five percent. And the problem was a company tax
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  Speaker 2: rate at that level is we rapidly become uncompetitive internationally,
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  Speaker 2: and so that turns off international investments. So these are
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  Speaker 2: the things that everyone's in the Evening's trying to balance.
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  Speaker 2: They do acknowledge in their insights, we think that, you know,
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  Speaker 2: all taxes impose a cost on economies when you raise them,
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  Speaker 2: So simply raising more taxes as damaging to economic growth,
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  Speaker 2: and so that they do acknowledge that trade off.
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  Speaker 1: Deff Nightingale Tax Expert, Independent tax Expert.
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  Speaker 2: For more Familily edition with Ryan Bridge. Listen live to
• 2:59
  Speaker 2: New Stall.
• 3:00
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• 3:03
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