IRD given lowdown on higher tax laws

By VERNON SMALL

Finance Minister-designate Michael Cullen has been in preliminary talks with Inland Revenue Department officials over the incoming Government's plan to raise taxes.

Labour has said it will raise tax on personal income above $60,000 from 33 per cent to 39 per cent but leave company tax at 33 per cent. Legislation to enact the rise will be introduced before Christmas and passed through all stages under urgency. The new rate will apply from April 1, 2000.

A spokeswoman said Dr Cullen would not yet discuss details of planned anti-avoidance legislation, although work was already under way on it.

Accountants have reported top income earners rushing to take advantage of the fact that companies, trusts and superannuation taxes would be lower than the top personal rate.

Dr Cullen has warned those resorting to tax avoidance schemes to tread carefully or risk breaching laws already in place.

Labour expects the new tax rate to raise about $370 million a year. Dr Cullen expects little slippage from that figure due to tax avoidance measures.

Meanwhile Prime Minister-designate Helen Clark has stressed that while there is no secret agenda on tax, the incoming Government's promised wide-ranging review of the tax system would be a priority.

"We need to work on the terms of reference and the personnel who will conduct it. It will be a thorough review, but I have consistently said that I do not want to see any significant change to the structure of the tax system implemented without a mandate from a subsequent general election," she said, after the signing of the coalition agreement with the Alliance.