Specialists join new review of tax system

The Government has approved a wide-ranging review of the tax system to be conducted over the coming year by a group of tax specialists and officials.

The review was not foreshadowed by Finance Minister Bill English before the election but he said the current economic conditions made it necessary.

In announcing the review, he also adjusted downwards National's medium-term goal for the top personal tax rate from 33c to 30c.

The top personal tax rate dropped from 39c to 38c on April 1 and is due to drop to 37c next year. The corporate tax rate is 30c.

"A strategic review of the tax system is necessary," said Mr English, "particularly in light of the challenges posed by the current economic and fiscal environment and our medium-term goal of a 30 per cent top personal tax rate."

Prime Minister John Key yesterday confirmed the review had been approved by a cabinet committee but downplayed its importance.

"It is a review to look at ways that we can improve the tax system in New Zealand but it is a wide-ranging review and I wouldn't read too much into it."

There will be no terms of reference for the group, which will include Stock Exchange chief executive Mark Weldon and Ernst and Young managing partner Rob McLeod, who led a previous tax review in 2001.

United Future leader and Revenue Minister Peter Dunne indicated that the review would be conducted between June and November through a series of meetings and papers that would be publicly available.

"It will consider the Government's medium-term fiscal position, the pros and cons of possible reform options and whether or not any of these should be dismissed as unworkable."

He said the topics to be considered would include the fiscal framework, and the structures of personal income tax, corporate tax, GST and tax integrity.

The group will be chaired by Victoria University's dean of commerce and administration, Professor Bob Buckle.

Other tax specialists from the private sector and academia will include Rob Cameron, Paul Dunne, Arthur Grimes, Gareth Morgan, Mike Shaw, Geof Nightingale and Casey Plunkett.

Inland Revenue and Treasury officials will also be part of the review and updates of the group's work will be published on their websites.