Bold and fresh ideas won the 2022 Robin Oliver Tax Policy Scholarship competition.
The annual scholarship, given by the Tax Policy Charitable Trust (supported by TMNZ) is designed to encourage university students to think critically about tax policy in New Zealand and strive for new solutions.
The award, worth $5000, supports one year of study for students majoring in taxation at Victoria University of Wellington or tax law at the University of Auckland.
Students were invited to submit an essay on a challenge facing our tax system and offer a potential solution. The submissions received were inspiring and thought provoking, with two winners selected by the judging panel.
Congratulations to Coralie Smith, at the University of Auckland and Peter Hazeldine at Victoria University of Wellington.
Coralie investigated the lack of transparency on use of tax-exempt funds by New Zealand Charities.
“From a policy standpoint, it is crucial to have systems in place which govern how charities are practically benefitting society with their tax-exempt funds.” says Smith.
In her submission, she highlights the risk of providing an unfair competitive advantage to charities with ancillary businesses and identified clear gaps within New Zealand regulations to oversee if accumulated funds are being channelled to their respective charitable pillar.
The solution – a new framework along with other resolutions such as simplifying reporting for smaller tax charities and extending advisory resources to help charities maintain their tax-exempt status. This would provide further transparency on use of tax-exempt funds whilst also reducing compliance costs for tax charities in New Zealand.
The judging panel commended Coralie’s passion for the topic and her understanding of how tax policy fits within our wider economic system and its ability to create positive impact.
Peter Hazeldine focused his proposal on reforms to New Zealand’s Fringe Benefit Taxation (FBT) rules.
He articulated how existing loopholes in the legislation hinder its ability to make employers neutral between providing fringe benefits and cash remuneration to employees. This shortfall in neutrality allows employees to receive tax-free benefits which creates inequities as employees earning the same salary can be treated differently, resulting in less horizontal equity.
The judges were impressed by Hazeldine’s research and his clear grasp of the tax policy problem.
To overcome the issue and close these loopholes, Peter recommends using market rates as a benchmark to assess if an employee receives a fringe benefit from their employer. Changing the value calculation method will create better consistency within the legislation and improve fairness for individuals.