23 Nov 2017

Cullen to lead Labour's tax working group

5:17 pm on 23 November 2017

Former Labour finance minister Sir Michael Cullen will head up the government's tax working group.

Sir Michael Cullen poses in the Labour Caucus Room in front of a bookcase of Hansard's verbatim reports of Parliament.

Sir Michael Cullen Photo: VNP / Phil Smith

Finance Minister Grant Robertson has today unveiled the working group's terms of reference.

Mr Robertson said the group would have a wide mandate to look at the tax system and consider what improvements could be made to ensure it is fair and balanced.

As promised before the election, the group will not be considering increasing income tax or the rate of GST, but it could look at the way GST works - including around the issue of online goods.

An inheritance tax and changes that would apply to the family home, or the land under it, would also be out of bounds.

However, the government has asked the group to look at a progressive company tax, with a lower rate for smaller companies, and a system of taxing capital gains or land, that excludes the family home, or other housing tax measures.

It has also been asked to look at how the tax system could play a part in delivering positive environmental and ecological outcomes, especially over the longer term.

The other members of the tax working group were expected to be announced by Christmas.

An interim report would be provided to the government by September 2018, with the final report due by February 2019.

Any significant changes resulting from it would not come into effect until the 2021 tax year.

The National Party said the tax working group looks like an 18-month-long rubber stamp for a Capital Gains Tax.

National's finance spokesperson, Steven Joyce, said there no pretence at the independence of the group with the appointment of Sir Michael as its chair.

"I think the only thing that's in there is obviously the desire by Grant Robertson to have a Capital Gains Tax. I think this whole group has been set up to deliver in that recommendation. The fact that he has got Sir Michael Cullen running it suggests nothing will turn up out of this group that Grant Robertson doesn't want."

Mr Robertson said people would know well in advance of the 2020 election what, if any, changes there would be.

The group's recommendations would not be binding on the government.

The review is expected to cost around $4 million.

The establishment of the working group is part of the government's 100 day plan.