The appointment of Sir Michael Cullen to chair the Labour government's tax working group provides the first clear signal of the make-up of the working group and therefore their likely approach to the New Zealand tax system.

Many will remember Michael Cullen as Minister of Finance and how comfortable he was with higher progressive tax rates and other initiatives which were not seen as business friendly.

Other members of the working group will be announced before Christmas, with its draft report due in late 2018 and final recommendations in February 2019.

Certain areas of the tax system are outside the scope of the review and these include an increase in income tax, the rate of GST, inheritance tax and changes that would apply to the family home or land beneath it. Clearly taking all these items off the table will provide more time to focus thinking on a capital gains tax.

We will await the appointment of the rest of the working group with interest.