Tax
Farmers support a fair tax system but like most people they are concerned about the growth of government and an increasing tax burden, with total tax revenue per head of population rising from $8,400 in 1999/00 to $12,900 in 2007/08. Tax cuts and the recession has seen a drop to $11,400 in 2010/11, but this is still $3,000 per person higher than 1999/00.
As well as the amount of tax paid, reducing the compliance costs associated with tax is also a high priority. The Business New Zealand-KPMG Compliance Cost Survey has consistently shown tax to be the top compliance cost priority for farmers, as it is for all respondents. In the most recent 2008 survey, 70 percent of farmer respondents listed tax as one of their top
three compliance cost priorities. This was the same percentage as for all respondents.
There have been a number of efforts in recent years to reduce tax compliance costs, but the costs remain high and the perception is that costs keep rising.
Tax Rates
Federated Farmers supports the reduction and alignment of personal income, trust, and company tax rates. It is problematic to have a top rate of personal income tax significantly higher than the trust and company tax rates, as was the case from 2000-09. This opened up opportunities for tax planning to avoid paying tax and was a factor behind property speculation that drove the unsustainable and unbalanced boom of the 2000s. As well as simplifying the tax system, lower and flatter income taxes also reward personal effort and encourage savings and investment.
For information click on the PDF below.
GST
Federated Farmers supported the Government's increase in GST to 15 percent. This is because we consider it more desirable to tax consumption than income and saving. We also support GST applying as widely as possible and with as few exemptions as possible in order to keep the tax as simple as possible and keep compliance costs low.
Gift Duty
Gift duty was an arcane tax that raised little money for the government (less than $2 million per annum) but imposed significant ongoing compliance costs on the private sector ($70 million per annum). It was also an impediment to farm succession from one generation to the next. Federated Farmers lobbied for many years for its abolition and we are pleased that the Government repealed gift duty from October 2011. We would be strongly opposed to its re-imposition.
Livestock Tax
The Government is concerned about the opportunity for farmers to exploit the livestock valuation elections for tax purposes, in particular the ease of leaving the Herd Scheme. The Government is reviewing the law around Herd Scheme elections and while Federated Farmers accepts that any abuse of the system should be addressed, we want to ensure that the vast majority of farmers who use the elections appropriately are not unfairly disadvantaged by any changes.
Capital Gains Tax
Federated Farmers is also strongly opposed to a capital gains tax. We are particularly concerned about the practical challenges and efficiency implications of introducing a capital gains tax and the inherent complexity of such a tax, especially when so many exemptions are proposed.
Land Tax
Federated Farmers would strongly oppose any revisiting of a land tax. A land tax would have a severe impact on land extensive businesses, with even a low rate of 0.5 percent costing farmers around $525 million per annum. Farmers already pay huge amounts in property taxes to their councils and a land tax applied to agricultural land would add to this inequity and would impact adversely on farmers' already fragile bottom lines.
Tax Simplification
Federated Farmers supports measures to improve tax administration to improve the tax system and reduce compliance costs. However, any new system must be robust and reliable and it is important for electronic interaction to remain voluntary at least until such time as cost-effective Broadband is available to people in rural areas, including remote areas.
- Continued moves to reduce and align personal income, trust, and company tax rates
- GST to remain at 15 percent and for it to be applied widely with as few exemptions as possible
- No land taxNo capital gains tax
- Gift duty's repeal to stand
- Any changes to livestock tax to not unfairly disadvantage farmers
- Tax administration to be improved and modernised but electronic interaction to remain voluntary.
Spokesperson
Federated Farmers Tax spokesperson is National President Bruce Wills, you can contact him at bwills@fedfarm.org.nz. Or you can contact the Federations National Policy Manager Nick Clark at nclark@fedfarm.org.nz.
