Inland Revenue has identified the topic for their long-term insights briefing (“LTIB”). The LTIB is produced every three years and advises Government on the tax and social policies administered through the tax system.

The proposed topic is on “what broad structure of the tax system will be suitable for the future”. This was chosen after comparing the tax system against other OECD countries and in consideration of looming fiscal pressures.

At a glance, the main components of tax revenue in NZ are income tax and GST. When compared against the OECD average, as a proportion of GDP NZ collects:

  • Lower levels of individual taxes
  • Slightly higher levels of GST
  • Slightly higher levels of land taxes
  • Significantly higher levels of corporate tax

NZ has the 8th highest corporate tax rate in the OECD and one of the lowest gaps between the corporate tax rate and the highest marginal tax rate. NZ also has the highest GST revenue ratio in the OECD but at 15%, imposes one of lowest GST rates.

Inland Revenue identifies several long-term tax issues that NZ will face. These are mainly related to the growing aging population. Broadly, this will change the workforce demographics and impact social assistance and health related funding. The bottom line is a need to generate more tax revenue in the future.

Inland Revenue suggests reviewing the tax base. This might mean modifying the current base. For example, increasing the GST rate to align to the OECD average, or reducing the corporate tax rate to incentivise foreign capital and ‘grow the pie’.

Or this might mean a need to broaden the current tax base. Inland Revenue recommended a consultation to consider the pros and cons of taxing:

  • Payroll 
  • Land
  • Real property
  • Wealth
  • Inheritance

Public submissions have recently closed, and the full briefing will be published in 2025. While we should not expect any meaningful changes soon, this could be a decisive moment for the future NZ tax base.