Revenue strategy
A good tax system is one that:
- finances public expenditure in a fair and efficient way
- minimises bias in economic decisions
- limits the number of tax provisions that provide preferential treatment to certain activities or sectors
- encourages effort and investment
- has low compliance and administrative costs, and
- minimises opportunities for tax avoidance and evasion.
The Government will operate a stable, predictable revenue system. The current main tax bases - personal income tax, company tax and a broad-based GST - will continue to raise the bulk of Crown revenue.
Crown revenue is currently lower than expenses, so the operating balance is in deficit. In the medium term, however, revenue will need to exceed expenses to sustain surpluses and help bring net core Crown debt below 40 per cent of GDP. Spending restraint is the Government's primary lever for achieving these goals. With prudent control of spending, the Government does not intend to seek major additional sources of revenue.
The Government will remain transparent and open in its tax policy processes. It is committed to public engagement in the design of tax policy including through the Generic Tax Policy Process. Public consultation ensures that the perspectives and expertise of those affected by proposals are considered and plays an important role in sustaining a tax system that is durable and widely accepted by taxpayers.
Over time, the tax system must respond to longer-term needs in a planned and coherent way. The Government will continue an active tax policy work programme to ensure the tax system remains fit for purpose.