25 Nov 2011
With the 2012 General Election taking place tomorrow, New Zealanders are being urged to carefully consider the taxation policies of each party.
The big picture
AUT academics Professor Chris Ohms and Dr Karin Olesen suggest voters really need to be thinking about the big picture when looking at tax policy.
“Tax is simply a way to fund Government expenditure. It does not create booming economies.”
According to the academics, the New Zealand economy will only grow when the right economic, trade and foreign policies are in place.
Factors of production
“The economy relies on adequate supplies of the ‘factors of production’ - land, labour and capital – in order to grow and function, in addition to the right number of consumers, and suppliers of goods and services.
“You need to get this right first. Only then can you put in place a tax system that is broad-based; that uses a low rate without any differences between tax entities such as companies and trusts; and that is fair and simple.”
Ohms and Olesen argue the tax system should follow the “comprehensive income” model, and include a tax on realised capital gains, excluding private use assets such as the family home.