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1.3 New Zealand Tax Policy
A good taxation system should treat all people of a country equally, clearly define the tax a
person should pay, be convenient for both tax payer and collector, and be cheap to pay and
collect tax. Those canons of taxation: equality, certainty, convenience and efficiency, first
developed by Adam Smith, in his 1776 book, The Wealth of Nations as a set of criteria by
which to judge taxes. This was comfirmed as appropriate for current government policy in
the treasurey reporter, Budget 2006, which stated:
“The Government is also committed to a fair distribution of the tax burden and a robust tax
system where people pay their intended rates of tax.
The Government will continue to promote sound administration of the tax system and clear
and effective tax rules that minimise administration and compliance costs.
The Government will give consideration to the composition of taxation to meet the
government’s equity and spending objectives at lowest economic cost.
The Government will consider the use of tax exemptions and concessions only in the
context of the full range of policy options and only if the benefits can be shown to outweigh
the costs for New Zealand.” 12
The key focus of New Zealand tax policy is to enhance the overall economic well-being of
New Zealanders by seeking ways to reduce the costs of imposing taxes – or making the tax
system more efficient – while promoting fairness and continuing to raise sufficient
revenue. 13 Added to this are the goals of making the tax system as certain and simple as
possible. 14
1.4 History of New Zealand income tax
The income tax system in New Zealand comprised of two important statues, the Income
Tax Act 2004 and the Tax administration Act 1994.
12 New Zealand Government, Budget 2006, Wellington, 2006, P 45.
13 Tax review 2001, Issuer Paper, Wellington, 2001
14 Inland Revenue Department, Simplifying Taxpayer Requirements, Wellington,1997
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