Tax Avoidance: Causes and Solutions - Scholarly Commons Home

elates to the indirect consumption expenditure goods and services tax. Both of these taxes
are integral to the revenue raising function of Government and maintenance of the tax
base. 8 Many reform measures have been introduced over the last two decades aimed at
broadening and strengthening the tax base of both the income tax and the goods and
services tax. From that time, New Zealand has moved to broad bases taxes at low rate. 9
Current the Inland Revenue Department administers three principle acts, the Income Tax
Act 2004, the Tax Administration Act 1994 and the Goods and Services Tax Act 1985.
Figure 2, is the comparison of the revenue from taxation in the last ten years. From the
figure we can see the revenue from GST increased gradually for last ten years, however
income taxation is still the most important component of the government tax revenue.
Figure2. Revenue from taxation 10
Although there are still some work need to be done for the tax system, the Tax review 2001
concluded that New Zealand's current tax mix is broadly right. By having two main tax
bases, overall revenue flows are relatively stable, even where one or other tax base
fluctuates. 11
8 New Zealand Treasury, Budget Speech and Fiscal Strategy Report 2000, Wellington, 2000.
9 Tax review 2001, Issues Paper, Wellington, 2001.
10 Statistics New Zealand, Crown Accounts Analysis, Wellington, 2006.
11 The Tax Review 2001, Final Report, IRD Wellington 2001
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