18 Jul 2017

NZ 'shamefully' poor on tax policies - Oxfam

9:08 am on 18 July 2017

New Zealand has one of the world's most unfair tax policies when it comes to closing the gap between rich and poor, a new report has found.

low wages, empty wallet

Photo: 123rf

The Commitment to Reducing Inequality (CRI) Index, co-produced by Oxfam, is a new global ranking of governments based on social spending as well as labour and tax policies.

It ranked New Zealand 115th out of 152 countries for progressive tax policies that bridged the gap between the rich and the poor.

As an OECD country, New Zealand placed 27th out of 35 and came 30th overall.

Oxfam New Zealand executive director Rachel Le Mesurier said that was not good enough.

"Rather shamefully for us in New Zealand, we don't come out so well particularly around our tax policies," she said.

Ms Le Mesurier said multinational companies were currently allowed to move profits made in New Zealand to other countries, meaning they paid a lot less tax.

"We're keen to see how [the] New Zealand government can respond and, in [an] election year, how the opposition parties and other political parties - what are their tax policies, and how would they make an effort to see if we [can] move up that CRI Index" she said.

The Labour Party today announced it would impose a diverted profits tax on multinational firms that sent profits offshore to minimise their tax bill.

It estimated the policy would collect $200 million a year in extra tax.

The government is also proposing to tighten the rules on multinational firms, but is expected to collect only about $100m.

New Zealand is already implementing the OECD's recommendations for clamping down on tax avoidance by global corporates.

To determine the fairness of a country's tax policies, the CRI Index considered tax structure, the impact of tax on inequality and the potential tax revenue available.

New Zealand placed 15th for social spending and 35th for labour policies overall.

Social spending refers to the amount of money spent on health, education and social protection, and labour policies include the minimum wage and workers' rights.

Sweden ranked first in the index with European countries taking out all the top 10 spots.