MPAC 605 Seminar 1 Tax Framework, Tax Residency, Capital Income 2015 (1)

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Window
Bizarre taxes:
tax. Hearth tax. Candle tax. Bed tax. Hat tax. Carbon tax. Fat tax. What next?
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The New Zealand Tax System
Inland Revenue, Commissioner, Inland
Proportional:
Same proportion of tax irrespective of income (eg 28%). Taxed at the same rate.
Regressive:
As income increases, rate of tax decreases. The less wealthy pay more (relatively).




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Revenue website , (Policy Advice division). Inland Revenue have extensive powers, officers bound by secrecy. Self assessment - taxpayers initially calculate (assess) their own tax liability. Tax law sources – actual tax legislation (including regulations), cases, binding rulings and determinations. Inland Revenue also publish various guidelines, statements. Numerous reviews of tax system and reform
in taxes with the public benefits they receive. Excise taxes (eg on petrol) are not readily visible, income taxes are.
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Taxation equity
Horizontal equity – people equally placed should bear equal tax burdens: If A and B have the same amount of income they should pay the same tax. Irrespective of the form of the income (income vs capital gains). Every person with the same ability to pay, pays the same amount of tax.
Jess
Income Tax
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Emma
10,000 x
10,000 x
Taxation equity
Vertical equity – people differently positioned should be taxed differently The notion that wealthy people (with a greater ability to pay) should bear a proportionately greater burden than poorer people (ie progressive tax rates) If A and B have different amounts of income they should pay a different amount of tax as a proportion of their income.
(1) Equity


Horizontal equity. Vertical equity. What, when, how much?
Taxed at a time that is convenient to pay. Revenue gained is not out weighed by the cost of compliance & administrative costs.
Introduction to Taxation
Interdisciplinary Nature: Accounting Law Economics & Psychology Political Science + + + =
The Field of Taxation
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Principles of a good tax
in business decision making.
(7) Serve economic objectives
Encouraging desirable market distortions.
(8) Visibility
Taxpayers should be able to identify what they pay
MPAC605 Taxation
22 July 2015
Seminar 1: Tax Framework, Tax Residency, Capital & Income
Andrew Maples Business and Law Building, Room 503
Department of Accounting & Information Systems University of Canterbury Christchurch
The New Zealand Tax System
Current legislation includes:
- Income Tax Act 2007 (>3,800 pages) - Tax Administration Act 1994 - Taxation Review Authorities Act 1994 - Goods & Services Tax Act 1985
1000 900 800 700 600 500 400 300 200 100 0 ITA TAA TRAA EGDA GSTA SECTIONS PAGES
Negative:
Transfer payment from the government based on income.
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Note: also Classification of taxes – Direct vs Indirect
பைடு நூலகம்
Types of tax bases
Income

– from employment, from business, company income, trust income, investment income (dividends, interest) GST – levied on most supplies of goods and services within New Zealand (15 per cent from 1 October 2010) Excise taxes – alcohol, tobacco, petrol
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Where does core government revenue come from? 2014/15: $72.5b (30.1% of GDP)
Other direct taxes includes resident interest and dividend withholding taxes. Other indirect taxes includes customs, excise and gaming duties and levies. (Treasury 2014)
Jess Emma
Income
Tax
100,000
y
10,000
x
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Categories of taxation
Progressive:
As income increases, rate of tax increases. Wealthy taxed more at a higher rate.
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Where do core government expenses go? 2014/15: $73.1b (30.3% of GDP)
Social security and welfare includes social assistance benefits such as NZ Superannuation, Jobseeker support and Emergency Benefit, Supported Living Payment and the Sole Parent Support (Treasury 2014) 7
- Per head of population, unpopular & abandoned.
In New Zealand a tax on Chinese Immigrants:
-£ 10 a head to 1896, then £ 100, abandoned 1944. - Apology given in 2002.
state. Levied without receipt of a specified benefit (not contract).
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Why do we need taxes?
To finance government. To provide public goods. To redistribute income. To effect fiscal policy.