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  • Writer's pictureDave Ananth


Updated: Oct 10, 2018

Sir Michael Cullen’s suggestion about bringing new taxes to drive behaviour as appearing in on Monday, March 5, is not well-founded.

“A wealth tax, a tax on financial transactions, a broader capital gains tax, a land tax and new environmental taxes will all be options considered by the Tax Working Group,” states the report appearing in the Stuff.

If the report is to be believed then Sir Cullen, has signalled these possibilities of taxes to “change bad behaviours”. Sir Cullen was speaking to the International Fiscal Association conference in Queenstown on Friday, March 2. I am not sure what he means by “changing bad behaviour”.

What is bad behaviour? Don’t we already have enough tax laws in place, mainly administered by the Commissioner of Inland Revenue to change bad behaviour?

Are we also to tax bad politicians and government departments for overspending tax payer’s money? The report also says “[Sir] Cullen appeared warm to the idea of taxes on environmental and social ills, such as greenhouse gas emissions, pollution and the causes of obesity. Does that mean the price of sugar, for example, will be taxed as it causes obesity? Or the price of fizzy drinks will be taxed? Does Cullen think that people will consume less sugar if there is a further tax?

I am not sure of his thinking, but if that were true, then we will have to deal with inflation, with prices of food and drinks to go up as many foodstuff and drinks contain sugar. Any cost increase, due to further taxes will only burden the consumer more.

This is not addressing the underlying issues. Education is perhaps a stronger tool than raising taxes. There is also the likelihood of capital gains tax from income for investment property and shares, according to reports. Any increase or introduction of taxes will have a dramatic impact on the public at large, some more than the others.

Any hint of what might be taxed will also create unnecessary speculation unhealthy for the businesses. It does cause anxiety amongst people. For example, hoarding can happen, if there is speculation a price of a certain good will be taxed.

Personally, I think company tax rates should be brought down in line with other OECD countries and Asia. The focus should be on reducing taxes and at the same time increase in compliance, enforcement and keeping up with the digital economy. With the many taxes and overheads now, many businesses are barely surviving and not making profits as one would expect. Businesses are now putting in longer hours to keep afloat.

I do not need to mention businesses which have retrenched staff or moved to other countries. Wealth tax is not an option. Wealth is subjective; there are no set rules to determine one’s wealth. One man’s wealth may seem mediocre to another and vice versa. Hard work and business acumen are crucial in creating wealth. The Government instead should focus on attracting investment which in turn will create more jobs.

More jobs pay more taxes. An investment climate which is healthy, bring companies which make profits and hence pay more taxes.

Giving tax breaks to pioneer companies and attracting major high-value players to come in and invest in New Zealand is more crucial than thinking about creating more taxes.

The more taxes the government imposes, the application of these tax becomes complicated and unattractive. Let’s move on from this shallow thinking and start thinking about creating wealth for New Zealand. Submissions to the Tax Working Group can be made at

Dave Ananth is an Auckland based Tax Barrister. The views expressed above are his own.


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