What is happening to tax policy in New Zealand and is it sensible?

Abstract

This paper reviews two recent changes to tax policy settings in New Zealand: an increase in the top income tax rate and a ‘housing package’. It argues that both represent ad hoc responses without a coherent strategy. Further, government officials’ policy assessments confirm these were progressed unduly rapidly, based on limited analysis, and against official advice on the most suitable option to deliver on the government’s own objectives. This is likely to result in policy outcomes falling well short of objectives, and potentially serious unintended consequences. Coherence of the tax system in particular is at risk.