PM: neutral tax shift ‘plausible’

Prime Minister Jacinda Ardern says it is ‘‘entirely plausible’’ that any tax changes stemming from the tax working group could be balanced by tax relief elsewhere.

In a video with Stuff’s political editor, Tracy Watkins, Ardern not only repeated that there would be no tax changes in the first term of Government, any changes that came as a result of the working group could well be ‘‘neutral’’.

‘‘We’ve ruled out any changes to, you know, significant new tax changes in this first term. It was a big issue during the election and it was one that we very openly worked through,’’ Ardern said.

‘‘We’ve said we’d set up a tax working group – we have, it’ll report this term – but anything it suggests wouldn’t take effect until a new term and people will have a chance to vote on it.

‘‘But it could be entirely plausible that it could be fiscally neutral.’’

Ardern has faced questions over the Government’s plans as its promise to cut net debt to 20 per cent of New Zealand’s gross domestic product by 2022.

While it has maintained that it is sticking to the target, Ardern has pointed to what she says was negligence by the former National government, forcing it to spend in areas it did not anticipate.

In broad terms, saying tax changes are ‘‘fiscally neutral’’ suggests that any revenue from new taxes or changes to existing ones would be offset by relief elsewhere.

Tax Working Group chairman Sir Michael Cullen has said a wealth tax, a tax on financial transactions, a broader capital gains tax, a land tax and new environmental taxes will all be options considered.

This would suggest that other taxes such as income tax could be adjusted accordingly, possibly by raising the thresholds at which income tax rises.

Finance Minister Grant Robertson has previously raised the possibility that the changes could be fiscally neutral, and noted any recommendations would not be binding.