English: No tax shocks

There won't be any "big bang" tax changes in the next Budget, Finance Minister Bill English says.

The Tax Working Group, which is reviewing the entire tax system, held its last public meeting yesterday and is due to report its recommendations to the Government by the end of the year.

Mr English said he hoped it would come up with "practical suggestions" because any changes would need to have public support.

The legitimacy of the tax system depended on people believing that everyone was paying their fair share.

"There is some evidence that some people are avoiding the top tax rate, because they can. There is a belief that people by investing in property are somehow avoiding tax obligations," Mr English said.

The tax working group has been looking at a wide range of scenarios that include spreading the taxation base on to land, investment properties, capital gains and other areas.

This in turn could be used to pay for cuts to personal and corporate tax rates.

Mr English said the Government's decision to make any changes within the tax system would be cost-neutral limited decisions.

This means any taxation gains in one area would be balanced with reductions elsewhere.

And any increase to GST would have to be offset by compensating low-income people to ensure they were not worse off.

Mr English hoped that the working group put together a range of packages that the Government could look at.

The Government has already signed up to move to a 30 per cent top rate for personal, business and trust tax, but has also signalled that any changes to the Australian tax system may have to be matched.

Mr English said the only change the Government had ruled out was a capital gains tax on individuals' homes.

"We have to look at a whole package."

- NZPA