Muriel Newman: NZCPR Submission to the Tax Working Group

Submissions on the Tax Working Group's Review of our tax system are due by midnight today. We urge anyone interested in the future of our economy to send in a submission to submissions@taxworkinggroup.govt.nz. 

For your interest, here is the submission sent in by the New Zealand Centre for Political Research.

Michael Gousmett: Fixing an Anachronism - the Veterinary Services exemption from Income Tax

INTRODUCTION

In 1955 the government of the day granted an exemption from income tax to veterinary services bodies in recognition of the importance of the work being undertaken by veterinary professionals in helping New Zealand’s post-war economy to develop.  

The exemption was backdated to 1951 and, 65 years later, remains in place. 

Michael Gousmett: Ngai Tahu’s Charitable Status as a Land-Dealing Property Developer

The Press of 3 October carried yet another story on Ngai Tahu’s continuing successes, this time focussing on its property developments at Wigram Skies, the former air force base. 

The CEO of Ngai Tahu Property Limited, Tony Sewell, in responding to people who criticise Ngai Tahu’s income tax exempt status as a charity, stated that he thinks that Maori in New Zealand are easy to criticise for being successful, and in so doing misses the point altogether.

Michael Gousmett: Waikato-Tainui’s Privileged Income Tax Status

The existing legislation should be amended to provide that profits from trading derived directly or indirectly by charitable organisations and dividends derived from any company substantially owned by such organisations are assessable for income tax at normal rates.

Taxation Review Committee, 1967

The competitive advantage a charity could gain through the ability to accumulate tax-free profits [enables] a faster accumulation of funds [which would allow it] to expand more rapidly than its competitors.  [This was] the real competitive advantage that trading activities owned by charities have over their competitors.  Trading operations owned by charities would be subject to tax in the same way as other businesses.

Tax and Charities, IRD, June 2001

Dr Michael Gousmett:Ngai Tahu Distributions and Tax

An article in the Christchurch Press of 1 August about Ngai Tahu claims that some profits from the iwi’s operations go to the tribal members in annual distributions and that the exemption from income tax benefits iwi members and not Ngai Tahu Property.  

I beg to differ, as an analysis of the annual returns filed by the Ngai Tahu Charitable Group on the Charities Register tell a different story. 

Dr Michael Gousmett: Taxing Non-related Large-scale Trading by Charities - correcting an unintended consequence

Recent letters to the Press have asked the question, why do trading operations undertaken by Ngai Tahu have charitable status, therefore are exempt from income tax?  As a charity specialist I always reply to such letters but the Press in exercising its editorial discretion does not always see fit for whatever reason to publish my informed responses. 

The latest letter, on 25 June by John Burn, pointed out that no doubt property developers and agricultural commercial rivals would be aggrieved at the fact that Ngai Tahu pays no income tax on its trading activities, the basis of which are public assets gifted by the government which now allows Ngai Tahu to build a huge corpus.  Mr Burn is quite right about the growth of Ngai Tahu’s trading activities and my response to the Press explained how that growth is occurring.