The 2020 election is different to any previously. The world and its economy sits precariously as COVID-19 ravages on. New Zealand has not been spared from the economic damage.
The PREFU forecasts a decade of deficits amongst a general sea of red ink. A far cry from the economic situation three years ago.
It is against this background that parties have had to plan their economic and tax policy responses.
The Labour Party has opted for a “steady as she goes” approach to tax, in favour of direct Government stimulus for the economy. A higher top personal tax rate is the only signalled change if it is re-elected. Other tax increases and new taxes have been ruled out in the next term.
The National Party has promised tax reductions – temporary threshold increases for individuals to deliver personal tax cuts and increased write-offs for business assets – as part of its wider stimulus package.
The other parties’ polices reflect their specific focus areas and constituencies.
Similar to our previous election taxmails, we leave our readers to make their own judgements on which policies are best.
Earlier this year we provided a framework for evaluating different tax policies in Repairing Government Finances: Some taxing options? There is no perfect tax; each policy will have trade-offs. How you value those trade-offs will determine whether you agree or disagree with a particular policy.
Finally, KPMG’s Reset outlines the opportunities for New Zealand to reset our economy, businesses, institutions, and how we engage with the rest of the world, the environment and with each other. The role of the tax system in helping to shape the future economy and society we want to have will be critical. When evaluating the different options and/or what is missing, consider the end goal – what should the new normal be?
At the beginning of July we held a webinar with Dr Deborah Russell, the Labour MP for New Lynn and the Chair of Parliament’s Finance and Expenditure Committee. The theme was on the role of tax policy in a post-COVID-19 world, including if/how the tax system should be used to re-balance the economy and repair the Government’s fiscal position.
You can watch the recording of our webinar here.
In early October we held a joint webinar with the Green Party of Aotearoa New Zealand, New Zealand First and ACT New Zealand. With COVID-19 and the global economic outlook uncertain, the next Government will face significant challenges in rebuilding and re-setting New Zealand’s economy (and possibly the tax system to help support it).
You can watch the recording of our webinar here.
To share his thoughts and National’s election tax policy, we were delighted to host Andrew Bayly, the National Party's Spokesperson for Revenue, Commerce, State Owned Enterprises, Small Business and Manufacturing as our keynote speaker for our webinar in October. The webinar explored whether a tax system “reset” is also required and, if so, what the future tax settings should look like.
You can watch the recording of our webinar here.