Perspectives on Tax 2 Foreword

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Perspectives on Tax 2 Foreword Progressive thinking perspectives ten on tax Published May 2017 Edited by Rhydian Thomas and Kirsten Windelov Design and layout by Dan Phillips Printed by Pivotal Thames This resource is also available online at www.psa.org.nz/taxbooklet New Zealand Public Service Association Te Pūkenga Here Tikanga Mahi PSA House, 11 Aurora Terrace, PO Box 3817, Wellington. Phone 0508 367 772 Email [email protected] www.psa.org.nz ISBN 978-0-908798-09-4 Contents 3 Foreword 7 Talking tax, with 25 Tax and the context and all that Social Contract Morgan Godfery Bob Stephens 11 History of tax policy in 28 Climate change New Zealand and tax policy Paul Young Dr Lisa Marriott 32 New Zealand’s tax 16 What my parents taught settings in an me about tax (and fairness) international context Max Rashbrooke Terry Baucher 19 Taxing wealth 36 Tax and family assistance Bill Rosenberg Susan St John 23 Four tax myths that 39 A light touch on foreign might pop up this year trusts and companies Keith Ng Shamubeel Eaqub 42 Author bios Progressive thinking: ten perspectives on tax 2 Foreword Kia ora koutou, healthy for now. In that sense, paying tax is a pragmatic decision – what it We need to talk about tax. funds may not always be of immediate Not like we have been, either. Not use to us, but it likely will be in the exclusively in terms of ‘tax burdens’ and future. Of course, most of the things ‘tax relief’, and not in terms that assume our taxes pay for are useful to us every all taxation is bad and all tax cuts are day – roads, schools, hospitals – and good. It’s simplistic, and it’s making many of those things are funded by the us forget the reasons we pay tax in the taxes of those who came before us. If we first place. This kind of individualistic talk about tax in this way, our parents language is also dividing us when we and grandparents invested in the New need more than ever to be standing Zealand that we now live in, and we are together for strong public services. reaping the rewards of their labour. Talking about tax These analogies are of some use in illustrating why we – the Public Service There are two enduring progressive Association Te Pūkenga Here Tikanga perspectives on rethinking our public Mahi – have produced this book. We’re dialogue around tax. The first uses the uncomfortable with the fact that tax analogy of a club membership; where only seems to be discussed by ordinary Erin Polaczuk tax is a subscription fee we all pay people when they’re talking about tax and to fund a place that offers all of the cuts during election year; that timeless Glenn Barclay personalised services we need, but it promise of governments seeking votes requires upkeep, staff, equipment… you National secretaries through what is essentially an over-the- may only have joined the club to use for the New Zealand table bribe – vote for us and we’ll give the gymnasium once a week, but your Public Service you some extra money in the pocket. subscription also helps to clean the Association bathrooms, to pay the reception staff, As we see it, our present situation in Te Pūkenga Here New Zealand as considered through to fix a leaking roof. Without yours and Tikanga Mahi the two perspectives described above others’ subscription fees, the whole is: a club whose management is so place would fall apart and no one would obsessed with offering membership get to use the services they joined the discounts that they’ve been overlooking club for in the first place. the severely degraded quality of the The second idea is that we ought to be equipment on offer, or a long-term talking about tax like it’s a long-term savings account with diminishing savings account where we each deposit contributions that is incapable of weekly, knowing that one day, we may producing the kind of return on well need to withdraw the money to pay investment that we as depositors have for our healthcare costs, even if we’re been promised. 3 Progressive thinking: ten perspectives on tax Foreword What metaphor fails to capture fair equal pay settlements and the protection of our natural environment Here at the PSA, we have an are all at risk. The Government acute sense of what tax pays for. Representing over 63,000 workers in urgently needs to redress these the public service, the state sector, funding deficits before tax cuts are local government, the community dangled in front of voters yet again. public sector and district health In fact, it could be argued that a third boards, we see what our taxes fund perspective on tax has implicitly every day. We see the Department emerged over the last nine years – in of Conservation ranger who looks it, New Zealand is a large business after our native wildlife and protects that has been through some very At present, it endangered species from extinction. tough economic times. We’re all We see the library staff, tirelessly investors in this great big corporation, is clear that working at the centre of their and after eight years of hardship, many of the communities to bring information we’re finally due a dividend from public services to life for all New Zealanders. We see our CEO for our ongoing faith in the the border control agents working to great belt-tightening of the nation. we fund with keep our borders secure, the Ministry This perspective is pervasive, and it is our taxes staff processing Official Information unhelpful. It is even more unhelpful Requests to make our society more that all of our major political parties have been transparent, the home and disability now seem to have bought in to this neglected and support workers looking after the rhetorical approach to some extent, most vulnerable people in New signalling their 'fiscal responsibility' underfunded Zealand. by promising to cap spending on since this All of these services are the result of critically underfunded public services the taxes that we and others before us at an arbitrary threshold while Government have paid for – they are not nice-to- assuming that current tax settings and took office in have add-ons for a prosperous society; levels are optimal. 2008…” they are the necessary foundations for New Zealand is not a membership- any well-functioning nation. only club; it is not a long-term savings At present, it is clear that many of the account; it is not a corporation moving public services we maintain through from red ink to black. It is a diverse our taxes have been neglected and South Pacific nation of over 4.5 million underfunded since this Government people who should rightly be able to took office in 2008: health, housing expect that paying tax affords them and education are the most visible and their whānau access to good casualties, but support for families, quality, timely and reliable public people made redundant, funding for services. Currently, they cannot. Progressive thinking: ten perspectives on tax 4 Proper state investment in these since its implementation. Several services is not a burden on the market authors identify the problem of economy, contrary to the popular major tax avoidance by multinational myth – as David Hall (Director of the companies, and several want to see Public Services International Research income tax arrangements re-evaluated Unit at the University of Greenwich) for a more progressive and fairer noted in a 2009 paper, strong system that doesn’t over-burden the economic growth has gone hand-in- worst-off in our society. Inequality, hand with rising public expenditure over-politicisation and fairness are since the mid- 19th century, at least. also recurrent themes. Consistently, it has been demonstrated As we write this, we’re coming up Consistently, that public services can be provided to the current Government’s ninth much more efficiently and effectively it has been Budget. We hope that around this by the state than by the market alone. time, you will enjoy reading and demonstrated Again: New Zealand is not a business. that public considering the perspectives on Having the conversation offer here, and that you will break services can be all social conventions and talk about In this book, we’ve collected together tax – loudly and unashamedly! – with provided much ten of our country’s best writers, your friends, families and colleagues. more efficiently academics and campaigners to Tax is not just the prerogative of consider the different elements of governments to discuss – it is paid and effectively tax policy in theory and practice. In by the people for the people, and by the state these ten chapters, our contributors consequently, we should all have a consider everything from tax myths significant say in how it operates. than by the and political promises to specific measures for taxation on wealth We hope you will join us in this market alone. and carbon emissions; from family conversation. Again: New assistance and inequality to social Ngā mihi nui, contract theory and tax avoidance. We Zealand is not a also include primers on New Zealand’s Erin Polaczuk business.” history of tax policy and our relative taxation in an international context. We’re not advocating for specific taxes nor fiscal policies in this book; this Glenn Barclay is not a manifesto. Some consistent themes do emerge over the ten articles here – New Zealand’s lack of a comprehensive Capital Gains Tax, for example, or the regressive status of Goods and Services Tax in practice 5 Progressive thinking: ten perspectives on tax Stand Together Progressive thinking: ten perspectives on tax 6 Talking tax, with context and all that Here’s some advice, a truism from years of talking and writing about te ao Māori: never mention the Treaty of Waitangi in polite company.
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