The NZ Herald’s Editors say the tax issue is one of the most crucial facing NZ, particularly as Auckland University professor of tax law Craig Elliffe points out a weakness in our taxation is we rely more heavily than most countries on revenue from personal incomes and company profits, which are “mobile” in the sense people and firms can fairly readily emigrate. We also rely heavily on a few high-income earners. He says the top 3% of earners provide 26% of income tax, and not all forms of income are equally taxed, especially property.

The Herald points out how finance Minister Bill English says sound finances and low taxes could be a key point of difference in attracting business investment and skilled people here. It says the reference to “sound finances” as well as low taxes should mean the Govt will not cut personal and corporate taxes without maintaining its revenue with other taxes, probably on property and a higher rate of GST.

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It warns when the Govt comes to “look through” the Tax Working Group’s report for “the best and most practical ideas,” it will be tempted to pick only the popular ones, tax cuts. It is a convenient theory to say merely lowering taxes can generate enough economic growth to correct deficits and reduce public debt. “It is a theory we should not test. Countries prosper when their public finances are under control.”

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