David Parker pushing ahead with tax principles legislation plan

Revenue Minister David Parker has confirmed the Government is continuing work on a plan for legislation enshrining into law "tax principles" that officials would then assess the tax system against.

During a speech on the tax system at Victoria University last April, Parker proposed legislation setting out agreed-upon tax principles and requiring officials to regularly report on the tax system using those principles as the basis. Political parties could still individually decide how best to apply these.

Public consultation on the proposal was initially expected in the middle of 2022 but this was delayed as internal work on the policy hadn't finished.

Parker has told Newshub the proposed Tax Principles Act is "still on the table" and hasn't been put aside as part of the Government's reprioritisation programme.

"We initially expected to take an earlier version of the legislation without the reporting framework out to consultation. Then we decided not to do that. We thought we should develop the reporting framework," he said.

"We thought it was more complete to have the reporting framework developed so that people could see the whole package."

Parker said he is expecting to take that reporting framework to Cabinet "in the near future".

But National's finance spokesperson Nicola Willis said the proposal should have been done away with.

"This is exactly the sort of thing that should be put in the 'nice to have but not necessary' basket. In fact, I don't even think it meets the threshold for 'nice to have'," she told Newshub.

"The Act won't deliver for a single New Zealand worker or their family and the dollars that are wasted drafting the reports and the Cabinet papers, coming up with the reporting framework, and taking it through Parliament and Select Committee are dollars that would be better in the backpockets of Kiwis."

In his speech last year, Parker said reporting frameworks already exist around fiscal responsibility and child poverty.

"In all these areas, we know what direction our country is headed, enabling voters to judge against promises made," he said.

"I find it anomalous that for the most core of government functions, the collection of tax, we have no equivalent. Little wonder our tax debate is so easily side-tracked by opinion and conjecture."

The minister said the main settled principles are horizontal equity (those in equivalent economic positions pay the same amount of tax), vertical equity (meaning a degree of progressivity where those who earn more pay more), administrative efficiency, and the minimisation of tax-induced distortions.

David Parker says it's "still on the table".
David Parker says it's "still on the table". Photo credit: Getty Images.

He suggested the reporting framework could include "a set of high-level, general principles in legislation", with the government of the day then required to "issue a guiding statement setting out its views on the development of tax policy".

"Tax policy officials would be required to independently report information relevant to those tax principles."

Parker said at the time he wanted "to see these principles enacted in a Bill before the end of the current Parliamentary term".

Willis said there was broad agreement the tax system should be fair, simple, and able to raise the revenue needed to fund public services.

"We don't need an Act to tell us that stuff. We don't need an Act to spell it out with all of the conga-line of report writers and compliance officers that will be associated with it."

She said the Government should be "squarely focused on lifting people's incomes, on reducing the cost of living and on helping people get ahead".

National's proposed adjusting tax thresholds to inflation to allow Kiwis to keep more of their money during the cost of living crisis. However, there has been some criticism that this benefits the wealthy more than the poor. The party's also promised to repeal new taxes Labour has introduced, like the Auckland Regional Fuel tax.

To help with the cost of living, the Government earlier this year extended cuts to the fuel excise duty, road user charges and public transport fares. It also axed or delayed a number of policies to narrow its focus on so-called "bread and butter" issues.