Sir Michael Cullen to chair Government's tax working group

Finance Minister Grant Robertson and Minister for Revenue Stuart Nash.
Finance Minister Grant Robertson and Minister for Revenue Stuart Nash. Photo credit: Newshub

The group tasked with reshaping New Zealand's tax system is being asked to put fairness - and the environment - at its centre.

The Government released the goals and leadership of the tax working group (TWG) on Thursday morning.

The TWG will be led by former Sir Michael Cullen, who served as Finance Minister from 1999 to 2008 in Helen Clark's Labour Government. His appointment will be a surprise to few.

Other members of the group will be announced before Christmas.

It's been directed to focus on fairness and will be tasked with figuring out how the tax system could deliver "positive environmental and ecological outcomes".

Finance Minister Grant Robertson says that's because Labour won't be introducing a water tax, which was scrapped as part of Labour's coalition deal with New Zealand First. Mr Robertson said it's possible the tax system could offer incentives for adopting environmentally friendly practices.

The group will have a year to put together its report, which will include a public consultation process. Recommendations are expected to be presented to ministers in February 2019.

Any "significant changes" would not be introduced until the 2021 tax year - after the next election.

The group will be barred from recommending changes to income tax rates, the rate of GST, inheritance tax and taxes on the family home or the land beneath it.

But while changes to the rate of GST are ruled out, Mr Robertson said there is room for the TWG to reconsider what GST applies to. That could mean taking GST off pads and tampons, or removing GST from fruits and vegetables.

It's expected the group will have eight members, including the chairperson.