New initiatives to make the tax system fairer and a crackdown on tax dodgers are expected to provide the Government with an extra $726.3 million of revenue over the next four years, says Revenue Minister Stuart Nash.
“The Coalition Government is committed to being fiscally responsible. Creating more fairness in the tax system is a critical part of this,” says Stuart Nash.
“Extra revenue from cracking down on those dodging their tax obligations, while levelling the playing field, will help the Government address significant under-resourcing of critical public services. We are reducing distortions in the tax system and ensuring everyone pays the right amount of tax.”
“Budget 2018 gives Inland Revenue $31.3 million of operating spending over the next four years, including $23.5 million to ensure outstanding company tax returns are filed. This is expected to recover approximately $183.3 million.
“It also includes $3.0 million of operating funding over the next four years to analyse the potential to improve tax compliance in specific industries through the use of third-party reporting and withholding taxes.
“Recently announced initiatives to reduce distortion in the tax system and boost productivity will also provide more revenue. Ring-fencing rental losses will mean speculators and investors can no longer offset tax losses from residential properties against other income to reduce their tax liabilities.
“This is expected to boost revenue by at least $325 million over four years and further dampen property speculation, while encouraging investment in the productive economy.
“Meanwhile, offshore suppliers of low-value goods will be required to register for, collect and return goods and services tax (GST) just like New Zealand retailers have to. This is estimated to provide $218 million in new revenue over the next four years, and is expected to increase each year as online shopping continues to grow.
“This Government’s plan includes adequately funding health, education and housing, increasing police numbers, and lifting more children out of poverty. We are not changing tax rates. But we do need a tax system that is simple, balanced and fair – where people and businesses comply with their obligations, and where those in similar circumstances pay the same amount.
“Our Tax Working Group is also tasked with making recommendations for a fairer and more balanced tax system. It will report back in early 2019 and no significant changes recommended in the Group’s final report will come into force until after the 2020 election,” says Stuart Nash.