Sandy Lau: PWC Partner on the call for countries to ensure their tax systems are fair

A tax expert says changes to the tax system must not stand in the way of economic growth. 

A UN committee is calling on countries to ensure tax policies are being applied proportionally to the wealthier individuals. 

It says regressive and ineffective policies can disproportionately affect already disadvantaged groups. 

But PWC partner Sandy Lau told Andrew Dickens while fairness is important, it's a complex issue. 

She says company tax rates needs to be competitive to attract foreign investment. 

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Episode Transcript

Speaker 1 (00:00):
A United Nations committee has questioned the fairness of world
tax systems and GST and New Zealand system. A statement
from the Committee for Economic, Social and Cultural Rights calls
for countries to check the taxes being applied proportionally to
the wealthiest individuals, and it says countries could focus on
more direct income taxation rather than taxes like our GST,

(00:20):
and they should tax large companies, particularly multinationals. So I've
got the partner from PwC, Sandy down with me right now,
good one to your Sandy.

Speaker 2 (00:28):
Good morning Andrew.

Speaker 1 (00:29):
So the UN says tax policies could disproportionately affect low
income households, women and disadvantage groups.

Speaker 2 (00:36):
How look, I think the topic around fairners and the
tax system is not a new one, and in particular
you'll probably remember there was quite a lot of discussion
around this in New Zealand in twenty twenty three, where
in then Revenue that a research project on the high
wealth individuals and where they found that group there effective

(01:00):
tax rate across their economic income was around nine percent,
while the average income family was about around twenty percent.
But it's not as simple as looking at the tax
rate across different income levels. While the idea of sen
is important, we also need to make sure that the
tax system doesn't create additional barriers for economic growth. So

(01:22):
there's a little bit more nuanced than that than just saying,
you know, we want to increase our corporate tax rate
while putting a higher personal tax rate, because in the
front of corporate tax rate, our company tax rate needs
to be competitive so that we can attract that really
important foreign investment in New Zealand as well. So it's
really a case of growing the pie is probably likely

(01:45):
to be better for everyone. So it's important when we
think about our tax system we don't end up with
one that creates more barriers for us to achieve that growth.

Speaker 1 (01:54):
True enough, enough, the fundamental foreign our economy though, is
that the government does not have enough revenue to sustain
our development, just to fund you know, just a business.
So politicians are reticent to get rid of GST. The
question is and what this UN committee asked, should they?

Speaker 2 (02:11):
Yeah? Now, the GST one is an interesting angle because
from New Zealand's perspective, our GST system is often seen
as world class, and that's because it applies so broadly
and at pretty much everything. At the same rate. So
there is a very efficient tax and as you alluded to,
it does bring in quite a lot of taxes collected

(02:31):
for New Zealand. It's about a quarter of it so
over the last years around twenty nine billion dollars. It's
not small bookies, And I guess the key question is
that it's not as simple as just reducing that GST
rate or maybe we will record discussions around it making
certain things GST free, because one that's very expensive and
to the other things that's not very well targeted. And

(02:55):
it's not really entirely clear from evidence that that whether
that reduction will get pass on to your end customers,
which is your lower income households and things like that.
But there might be something in it because GS is
quite regressive. It can be regressive, and so looking at
how we make that more progressive could be a good idea.

Speaker 1 (03:15):
So Andy, thank you so much for your thoughts and
your expertise. Today. For more from earlier edition with Ryan Bridge,
listen live to News Talks it'd be from five am weekdays,
or follow the podcast on iHeartRadio.