PM Jacinda Ardern confirms changes to tax system coming

Jacinda Ardern has confirmed changes will be made to the tax system this year, as she outlined the Government's priorities in a speech to the business community.

Outlining the Government's economic plan for 2019 in Auckland on Friday, the Prime Minister said changes will be made to the tax system to make it fairer.

She said the Government has received the Tax Working Group's report, the recommendations of which will be released on February 21, with the Government's response due in April.

It's expected the Tax Working Group will recommend the Government introduce a Capital Gains Tax, which would be a hard sell for the Prime Minister if she chooses to implement one.

Ms Ardern scrapped Labour's capital gains policy a week before the 2017 election in the face of immense criticism and attack ads from National.

Speaking to business leaders, she said: "As we enter into a period of discussion and debate, I hope it's guided by the overriding goal of fairness, and building an economy and system that works in the best interest of New Zealand and its people."

Kirk Hope, Business New Zealand chief executive and member of the Government's Tax Working Group, told The AM Show on Friday there is "clearly a majority" in favour of a capital gains tax.

Government's Wellbeing Budget

It's been a month since the Prime Minister pitched the Government's Wellbeing Budget at the World Economic Forum, and this was her chance to sell it to New Zealand.

The 2019 Wellbeing Budget is set to focus less on improving Gross Domestic Product (GDP) and the economy than in the past, and focus more on ensuring New Zealanders' wellbeing.

In her speech on Friday, Ms Ardern said the Government's upcoming Budget will focus on lifting Māori and Pacific incomes and opportunities, and creating opportunities for transitioning to a sustainable low emissions economy.

She said that it aims to support a thriving nation in the digital age through innovation, reducing child poverty, decreasing family violence, and supporting mental health wellbeing for all Kiwis, particularly those under 24.

"The Wellbeing Budget is not only about improving the livelihoods of New Zealanders, it is key to ensuring we are protected from the international headwinds the economy may face."

She said the OECD Secretary General advised her in Davos recently that the Government's Wellbeing Budget is being closely followed by the rest of the world to see how it could fit with other nations.

"It will ensure that those closest to the margins are protected and that no one is left behind."

That being said, the Prime Minister affirmed the Government's "strong desire" to continue partnering with business wherever it can: "I look forward to working with all of you in delivering on this in 2019."

Ms Ardern has fought back against business confidence dropping since her Government came to power in 2017. Her speech to the business community in August came after an economic survey said business confidence hadn't been so low since 2011.

In response, Ms Ardern announced the formation of a new business council aimed at strengthening the relationship between business and Government. It would "provide a forum for business leaders to advise me," she said at the time.

Business confidence has since bounced back, according to some. Westpac chief economist Dominick Stephens told Newshub last month that confidence improved over the past few months, but rising costs are a burden.

There is still pessimism among businesses, however, according to NZIER's Quarterly Survey of Business Opinion. Around 18 percent of businesses expected business conditions to get worse over the next six months.

Mr Hope told The AM Show he hoped the Prime Minister would address uncertainty in the economy in her speech on Friday.

"There have been a lot of working groups and Business New Zealand has thankfully been represented in some of those, particularly the tax one," he said. 

"We just want to see a bit more clarity around what the long-term direction is so that businesses can have the confidence to invest."


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