June 28, 2025 • 12 mins
IRD reports that New Zealand will need to restructure the tax system to fund the superannuation.
Capital gains tax could be on the table, and even a GST hike from 15%.
What sort of adjustments should we expect? Is there any other way to fund the super?
Tim Beveridge talks to PwC Tax Policy Leader, Sandy Lau...
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks dB.
Speaker 2 (00:10):
Yes, welcome back to Politics Central. This is Weekend Collective
on the twenty ninth of June. Right earlier this week,
Ird reported kiwis are going to need to pay more
taxes to cover the superannuation bill that's heading our way
in future years. They say that by twenty sixty a
quarter of the population will be over the age of
sixty five. That's more than one million of us sitting
(00:30):
with a weekly support payment from the government. I think
I heard that some years ago there used to be
six or seven taxpayers for every supernuitant, where it's heading
more like one or two, I think in years to come.
So that sounds pretty scary, isn't it. Ird notes that
we could cut spending rather than collect more tax but
at some point we won't have much else to cut.
So what are they proposing that? They say new taxes
for land assets and social security should be explored, and
(00:53):
lifting the GST from fifteen percent ouch, maybe capital gains
tax and all that old chestnut is on the table.
PwC NZ tax policy leader Sandy Lowes joins me. Now Sandy, Sandy, Hello,
Tim So what's the reaction been within sort of experts
(01:13):
in your position in terms of consensus with what we're
looking at.
Speaker 3 (01:18):
Yeah, so this particular paper, it's something that all government
agencies have to do once every three years, and in
effect it's just it's under the public finance, which requires
them to have a think about some sort of mid
to longer term trends and issues. And this for this
(01:38):
one and in Revenue had initially actually gone out to
consult with publicly to say, oh, well, we're thinking this
topic whereby the issue around where the New Zealand's tax
system is actually going to be able to sustain the
amount of tax revenue we're going to need in the future,
that's a topic that we want to explore a bit further.
And they actually ask for feedback for that a few
(02:01):
months ago, and this paper is a result of that
initial consultation, and yeah, it's really taking a look at Okay,
if nothing else changes over the coming years in terms
of spending or policy settings, it's going to look like,
as you say, it's going to cost a lot more
(02:21):
to pay for some of the things. That's going to
be where we'll have to grapple with as we have
a more of aging population. Is it just a question?
Speaker 2 (02:32):
Is it just a question of math? It's like, well,
at the moment, this is what we're spending, this is
what we're bringing in in tax and this is what
our bill is going to be. And they don't all
that up.
Speaker 3 (02:42):
Very simply. Yes, that that is. That is the issue,
the number the issue they're trying to get to. They
spend one hundred odd pages thinking about what are some
of the options that you've outlined very eloquently.
Speaker 2 (02:53):
I could have happily written the conclusion for a very
small fee. Hey, So, I mean, politicians talk about cutting spending,
but every government spending more and more. Is there any
change in policies, sets, or anything a government might do
that might take the pressure off this need for more taxes?
Speaker 3 (03:11):
Well, I mean, obviously every government will have the ability
to pull a whole bunch of different levers, and obviously
there there's a lever as to you can reduce your
spending or ultimately if we accept that some of the
things that we're still going to want to pay for, for example, healthcare,
I think healthcare is one of the things that they
really picked out as looking on to cost a whole
(03:33):
heap more so I think currently. I mean they were
saying Treasury estimated that currently is about In twenty twenty one, anyway,
the healthcare cost was six point nine percent of GTP.
They are looking ahead to twenty sixty one, they're thinking
that that's going to increase to ten point six percent.
So you know there are some levers as they say
that expenditures can be pulled. But the other hand, on
(03:56):
the other side is how do you increase bringing them
more money? And tax taxes obviously the most obvious one
to look at.
Speaker 2 (04:04):
What's the most if you were a politician, what would
be the change that you would go to the campaign,
go to a campaign on because politicians don't like campaigning
on more taxes generally, do they unless they're the Green Party.
Speaker 3 (04:18):
Oh. Look, to be honest, that's a really tough question, mane.
That's why I'm not a politician, because it's very hard
to answer. And there's a whole bunch of options that's
been canvassed, and we've seen a number of those before,
and this particular paper thinks about that as well. And
there's a portion of it talks about what are the
(04:39):
new taxes that you could new Zealand could bring in
and they talk about things like wealth taxes, land and
property taxes, or inheritance tax stamped you all sorts of
different things. The other option that the first option that
they've put in there is really thinking about, well, give
it if we take the system that we have now,
which we think works relatively well, and we can obviously
(05:02):
increase the rights, which is I think moist of the
options look at is either raising income tax rates or
our GST rate. So yeah, I mean these options there.
Speaker 2 (05:17):
How hard is it because one of the biggest things
for any policy change, with you being elected as a
politician to make those changes is getting people to understand
the situation we're in. It's one thing for a paper
to be released by ID and you guys do work
on it. How hard is it to get the average
member of the public to understand how challenging it's going
to get.
Speaker 3 (05:37):
I think there's lots you know, there's been a lot
of discussion, and I think, you know, the media is
great in talking about this stuff as well. I think
at the harder us just being able to distill down
what does it actually mean? And I think as we
put out the facts, the paper itself. It's just putting
a bunch of facts out there, right, and to be honest,
(05:59):
it is I think it is a really good piece
of work that and then review has pulled together. It
does explain the issues that we're likely as a nation
going to grapple with in the not too distant future,
which is just pointing out the fact that we've got
a bunch of New Zealanders that are going to be older,
we're living for longer, We're going to have less people working,
(06:21):
and if we look at our current tax take, a
lot of maybe about half of it is taxes on labor,
so we have less people working and more people relying
looking to you know, rely on their super or health
care and things like that. As you say, it's a
simple math equation to some extent.
Speaker 2 (06:42):
Is there anything particularly that is really urgent in that
report for the IID.
Speaker 3 (06:49):
Look, I think it's one of those things that is looming,
but it's more in the medium term. I think there's
been a bunch of reviews that's been done over the
last few years, and I think the Tax Working Group
was the last one, which was I can't remember what's
medium term.
Speaker 2 (07:06):
By the way, what's medium term five ten years, Well,
they look.
Speaker 3 (07:10):
Out to twenty sixty one, so that's quite a little
while longer away. That to me feels like quite distance.
But I think in the next sort of twenty years
we're going to have to think about what our tax
system is actually going to So if we want, if
we want to continue to have some thing that the
(07:30):
government currently plays.
Speaker 2 (07:31):
For, isn't that I mean, I know I'm asking for
a lot of recons here, but isn't that Part of
the problem is that if a challenges medium term as
we've described, that these problems get pushed down the road
because they're unpalatable for everyone who wants to get elected,
and we keep pushing it down the road, and then
all of a sudden it's like, man, we've got to
do something quite urgently.
Speaker 3 (07:51):
Yeah, look, I think that that might happen, but hopefully not.
Hopefully New Zealanders can come along for the journey and
discussions and we can make an informed decisions as to
who we vote for in the coming elections, because ultimately,
you know these it's going to play out. If nothing changes,
that's sort of the likely outcome that's going to change.
(08:12):
But the other piece that I think is really important
as well as we should It's not always about raising taxes,
is also thinking about have well want that and also
having the right settings and our tax system to ensure
that our economy can grow. So there's a bit of
you know, you want to grow the pie so to speak,
so that there is more revenue as opposed to just
raising the rates themselves so to speak.
Speaker 2 (08:35):
Yeah, well, how did just for some comparison, how do
we sit taxation wise? Is there something that's missing in
the New Zealand context that Australians might come home and go,
I can't believe you guys aren't paying that. Taxes is
what we pay? How do we sit compared to Australia
and other countries we like to compare.
Speaker 3 (08:50):
Ourselves to You're actually in New Zealand in terms of
tax to GDP we sit pretty much in the middle, right,
So if we took that as I get amongst OBCD
countries and so you know, if we look at that,
then our system is probably pulling not not just a
(09:10):
pretty average amount of revenue you would expect of developed economy,
but and and you know, there are always slight differences
in tax systems. For example, ole GST system is much
more broader than say, the Australians are our neighbors. We
have a much clean, well some simple in some way
(09:31):
system where we just impost GSLM almost everything at a
single rate. So so you know that that that's wels.
Australia has GST. It's it's slightly different, and I guess
obviously in terms of uh and obvious sort of spot
that's not we don't have any Zealands a comprehensive capital
gains tax and so but that's not to say that
(09:54):
our system currently still taxes some forms of capital gain.
It's just not comprehensive at the minute. So there are
slight nuances, but overall, I think at the moment any
our tax system is still doing a pretty good job
in terms of bringing in the revenue that we're there
in the in the way that's most efficient.
Speaker 2 (10:12):
So what would be your what would be your guess
casually speaking, because I know it's a serious job and
the stuff, But what would be your guess is it's
going to be the probably the most likely change.
Speaker 3 (10:25):
I mean, I think there probably be some more rates tinkering.
I think it's possibly easier to pull leavers in our
rules as are already as opposed to bringing in something
new because that adds an additional complexities and as you say,
you know, quite hard to get across the line in
(10:46):
many ways. But you know, I guess shifting the rates,
whether it's income tax with GS or whatever, that might
be the easiest approach if we are looking at just
wanting to increase our tax review. Take.
Speaker 2 (11:01):
Yeah, Sandy, thank you so much for your time. This
staftening a really appre enjoy the rece day.
Speaker 3 (11:07):
Thanks for having me.
Speaker 2 (11:08):
Bubba that is Sandy Laoshi's a PwC tax policy leader.
You know some talking about talk back about this with
actually two angles for talkback, because you might be sitting
there hotly wanting to have your say about the changes
and sentencing that we discussed with Ruth Money before, about
whether you're happy with the fact that there are going
to be fewer discounts to be granted by judges and
the introduction of cumulative sentences. Do you support this tougher
(11:30):
on crime thing? But also that's the other we can't
you can't just talk about that and ignore the conversation
we've just had. We're not going to be able to
afford our superannuation is the simple question in decades to come,
what do you think needs to change? Do we need
to Actually I forgot to ask her about should we be?
This is a question you can answer as to whether
(11:52):
superannuation there needs to be a change in the age
and who can get it is?
Speaker 3 (11:57):
Does it?
Speaker 2 (11:57):
Is it going to end up being means tested because
it does sound like it's something we can't afford. So
we want your calls. You can you can offer your
opinions on either or those waitundred eighty ten eighty text
nine two nine two lines are open. Let's get onto it.
Speaker 1 (12:10):
For more from the Weekend Collective, listen live to News
Talk SEDB weekends from three pm, or follow the podcast
on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talks dB.
Speaker 2 (00:10):
Yes, welcome back to Politics Central. This is Weekend Collective
on the twenty ninth of June. Right earlier this week,
Ird reported kiwis are going to need to pay more
taxes to cover the superannuation bill that's heading our way
in future years. They say that by twenty sixty a
quarter of the population will be over the age of
sixty five. That's more than one million of us sitting
(00:30):
with a weekly support payment from the government. I think
I heard that some years ago there used to be
six or seven taxpayers for every supernuitant, where it's heading
more like one or two, I think in years to come.
So that sounds pretty scary, isn't it. Ird notes that
we could cut spending rather than collect more tax but
at some point we won't have much else to cut.
So what are they proposing that? They say new taxes
for land assets and social security should be explored, and
(00:53):
lifting the GST from fifteen percent ouch, maybe capital gains
tax and all that old chestnut is on the table.
PwC NZ tax policy leader Sandy Lowes joins me. Now Sandy, Sandy, Hello,
Tim So what's the reaction been within sort of experts
(01:13):
in your position in terms of consensus with what we're
looking at.
Speaker 3 (01:18):
Yeah, so this particular paper, it's something that all government
agencies have to do once every three years, and in
effect it's just it's under the public finance, which requires
them to have a think about some sort of mid
to longer term trends and issues. And this for this
(01:38):
one and in Revenue had initially actually gone out to
consult with publicly to say, oh, well, we're thinking this
topic whereby the issue around where the New Zealand's tax
system is actually going to be able to sustain the
amount of tax revenue we're going to need in the future,
that's a topic that we want to explore a bit further.
And they actually ask for feedback for that a few
(02:01):
months ago, and this paper is a result of that
initial consultation, and yeah, it's really taking a look at Okay,
if nothing else changes over the coming years in terms
of spending or policy settings, it's going to look like,
as you say, it's going to cost a lot more
(02:21):
to pay for some of the things. That's going to
be where we'll have to grapple with as we have
a more of aging population. Is it just a question?
Speaker 2 (02:32):
Is it just a question of math? It's like, well,
at the moment, this is what we're spending, this is
what we're bringing in in tax and this is what
our bill is going to be. And they don't all
that up.
Speaker 3 (02:42):
Very simply. Yes, that that is. That is the issue,
the number the issue they're trying to get to. They
spend one hundred odd pages thinking about what are some
of the options that you've outlined very eloquently.
Speaker 2 (02:53):
I could have happily written the conclusion for a very
small fee. Hey, So, I mean, politicians talk about cutting spending,
but every government spending more and more. Is there any
change in policies, sets, or anything a government might do
that might take the pressure off this need for more taxes?
Speaker 3 (03:11):
Well, I mean, obviously every government will have the ability
to pull a whole bunch of different levers, and obviously
there there's a lever as to you can reduce your
spending or ultimately if we accept that some of the
things that we're still going to want to pay for, for example, healthcare,
I think healthcare is one of the things that they
really picked out as looking on to cost a whole
(03:33):
heap more so I think currently. I mean they were
saying Treasury estimated that currently is about In twenty twenty one, anyway,
the healthcare cost was six point nine percent of GTP.
They are looking ahead to twenty sixty one, they're thinking
that that's going to increase to ten point six percent.
So you know there are some levers as they say
that expenditures can be pulled. But the other hand, on
(03:56):
the other side is how do you increase bringing them
more money? And tax taxes obviously the most obvious one
to look at.
Speaker 2 (04:04):
What's the most if you were a politician, what would
be the change that you would go to the campaign,
go to a campaign on because politicians don't like campaigning
on more taxes generally, do they unless they're the Green Party.
Speaker 3 (04:18):
Oh. Look, to be honest, that's a really tough question, mane.
That's why I'm not a politician, because it's very hard
to answer. And there's a whole bunch of options that's
been canvassed, and we've seen a number of those before,
and this particular paper thinks about that as well. And
there's a portion of it talks about what are the
(04:39):
new taxes that you could new Zealand could bring in
and they talk about things like wealth taxes, land and
property taxes, or inheritance tax stamped you all sorts of
different things. The other option that the first option that
they've put in there is really thinking about, well, give
it if we take the system that we have now,
which we think works relatively well, and we can obviously
(05:02):
increase the rights, which is I think moist of the
options look at is either raising income tax rates or
our GST rate. So yeah, I mean these options there.
Speaker 2 (05:17):
How hard is it because one of the biggest things
for any policy change, with you being elected as a
politician to make those changes is getting people to understand
the situation we're in. It's one thing for a paper
to be released by ID and you guys do work
on it. How hard is it to get the average
member of the public to understand how challenging it's going
to get.
Speaker 3 (05:37):
I think there's lots you know, there's been a lot
of discussion, and I think, you know, the media is
great in talking about this stuff as well. I think
at the harder us just being able to distill down
what does it actually mean? And I think as we
put out the facts, the paper itself. It's just putting
a bunch of facts out there, right, and to be honest,
(05:59):
it is I think it is a really good piece
of work that and then review has pulled together. It
does explain the issues that we're likely as a nation
going to grapple with in the not too distant future,
which is just pointing out the fact that we've got
a bunch of New Zealanders that are going to be older,
we're living for longer, We're going to have less people working,
(06:21):
and if we look at our current tax take, a
lot of maybe about half of it is taxes on labor,
so we have less people working and more people relying
looking to you know, rely on their super or health
care and things like that. As you say, it's a
simple math equation to some extent.
Speaker 2 (06:42):
Is there anything particularly that is really urgent in that
report for the IID.
Speaker 3 (06:49):
Look, I think it's one of those things that is looming,
but it's more in the medium term. I think there's
been a bunch of reviews that's been done over the
last few years, and I think the Tax Working Group
was the last one, which was I can't remember what's
medium term.
Speaker 2 (07:06):
By the way, what's medium term five ten years, Well,
they look.
Speaker 3 (07:10):
Out to twenty sixty one, so that's quite a little
while longer away. That to me feels like quite distance.
But I think in the next sort of twenty years
we're going to have to think about what our tax
system is actually going to So if we want, if
we want to continue to have some thing that the
(07:30):
government currently plays.
Speaker 2 (07:31):
For, isn't that I mean, I know I'm asking for
a lot of recons here, but isn't that Part of
the problem is that if a challenges medium term as
we've described, that these problems get pushed down the road
because they're unpalatable for everyone who wants to get elected,
and we keep pushing it down the road, and then
all of a sudden it's like, man, we've got to
do something quite urgently.
Speaker 3 (07:51):
Yeah, look, I think that that might happen, but hopefully not.
Hopefully New Zealanders can come along for the journey and
discussions and we can make an informed decisions as to
who we vote for in the coming elections, because ultimately,
you know these it's going to play out. If nothing changes,
that's sort of the likely outcome that's going to change.
(08:12):
But the other piece that I think is really important
as well as we should It's not always about raising taxes,
is also thinking about have well want that and also
having the right settings and our tax system to ensure
that our economy can grow. So there's a bit of
you know, you want to grow the pie so to speak,
so that there is more revenue as opposed to just
raising the rates themselves so to speak.
Speaker 2 (08:35):
Yeah, well, how did just for some comparison, how do
we sit taxation wise? Is there something that's missing in
the New Zealand context that Australians might come home and go,
I can't believe you guys aren't paying that. Taxes is
what we pay? How do we sit compared to Australia
and other countries we like to compare.
Speaker 3 (08:50):
Ourselves to You're actually in New Zealand in terms of
tax to GDP we sit pretty much in the middle, right,
So if we took that as I get amongst OBCD
countries and so you know, if we look at that,
then our system is probably pulling not not just a
(09:10):
pretty average amount of revenue you would expect of developed economy,
but and and you know, there are always slight differences
in tax systems. For example, ole GST system is much
more broader than say, the Australians are our neighbors. We
have a much clean, well some simple in some way
(09:31):
system where we just impost GSLM almost everything at a
single rate. So so you know that that that's wels.
Australia has GST. It's it's slightly different, and I guess
obviously in terms of uh and obvious sort of spot
that's not we don't have any Zealands a comprehensive capital
gains tax and so but that's not to say that
(09:54):
our system currently still taxes some forms of capital gain.
It's just not comprehensive at the minute. So there are
slight nuances, but overall, I think at the moment any
our tax system is still doing a pretty good job
in terms of bringing in the revenue that we're there
in the in the way that's most efficient.
Speaker 2 (10:12):
So what would be your what would be your guess
casually speaking, because I know it's a serious job and
the stuff, But what would be your guess is it's
going to be the probably the most likely change.
Speaker 3 (10:25):
I mean, I think there probably be some more rates tinkering.
I think it's possibly easier to pull leavers in our
rules as are already as opposed to bringing in something
new because that adds an additional complexities and as you say,
you know, quite hard to get across the line in
(10:46):
many ways. But you know, I guess shifting the rates,
whether it's income tax with GS or whatever, that might
be the easiest approach if we are looking at just
wanting to increase our tax review. Take.
Speaker 2 (11:01):
Yeah, Sandy, thank you so much for your time. This
staftening a really appre enjoy the rece day.
Speaker 3 (11:07):
Thanks for having me.
Speaker 2 (11:08):
Bubba that is Sandy Laoshi's a PwC tax policy leader.
You know some talking about talk back about this with
actually two angles for talkback, because you might be sitting
there hotly wanting to have your say about the changes
and sentencing that we discussed with Ruth Money before, about
whether you're happy with the fact that there are going
to be fewer discounts to be granted by judges and
the introduction of cumulative sentences. Do you support this tougher
(11:30):
on crime thing? But also that's the other we can't
you can't just talk about that and ignore the conversation
we've just had. We're not going to be able to
afford our superannuation is the simple question in decades to come,
what do you think needs to change? Do we need
to Actually I forgot to ask her about should we be?
This is a question you can answer as to whether
(11:52):
superannuation there needs to be a change in the age
and who can get it is?
Speaker 3 (11:57):
Does it?
Speaker 2 (11:57):
Is it going to end up being means tested because
it does sound like it's something we can't afford. So
we want your calls. You can you can offer your
opinions on either or those waitundred eighty ten eighty text
nine two nine two lines are open. Let's get onto it.
Speaker 1 (12:10):
For more from the Weekend Collective, listen live to News
Talk SEDB weekends from three pm, or follow the podcast
on iHeartRadio.
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