It’s often said that if you stick around long enough, you will see fashion come, go and come back around again. Reflecting on my accounting career, I am now seeing the same with tax.
During my early employment as a young accounting clerk, I was tasked with collating and calculating the value of a recently deceased client’s Estate. In those days, Estate Duty was levied on Estates over $150,000. I took my preliminary calculations to management, who muttered some expletives, as I learnt the Estate was over this level and was told to revisit my findings in attempt to lower it. After an exhaustive search, I found the client’s last phone account which fortunately was enough to bring the Estate’s value just below the threshold to avoid paying Estate Duty.
Estate Duty was finally abolished in 1992, a version of this now features as the Green Party’s tax policy.
Land Tax started in1878 with the thresholds and criteria being adjusted many times since then. In the early 1980’s, the Muldoon administration lowered those thresholds and thus made many commercial businesses liable. This was not well received by the business community, and the tax was finally abolished in 1992.
Land Tax now features prominently in the Opportunity Party’s tax policy.
The top rate of tax has been tinkered with many times over my career. The Muldoon administration put a surcharge on this, taking it from 60% to 66%. This was changed by the Lange administration as part of the move to indirect tax (GST). In fact, part of Rodger Douglas’ reforms included having a flat tax rate. His rationale was that this removed the incentive for people to avoid and evade paying tax, and provided the incentive for people to want to earn more. This part of his plan was never implemented and led to the eventual parting of ways between Douglas and Lange.
The Green Party are now proposing a top rate of tax of 45%.
The Muldoon administration introduced income testing for National Superannuation in 1984. This too, was not well received and was seen as contributing to the fact that they were not re-elected. Since then, no Party has been brave enough to re-introduce it.
Whilst no political party currently has income testing included in their tax policy, there has been recent media discussion on the topic as the cost of National Superannuation becomes more unsustainable.
Capital Gains Tax has been raised over the course of my working career and although we have come close to having this implemented many times, it has not yet materialised. This, or a form of this tax, figures prominently in tax policies for all centre-left parties.
Time will very soon tell which of these taxes are reimplemented!
Tax calculations can be complex. If you’d like support with your personal or business taxes, feel free to reach out to us here at MCI.
Bill Taylor