Tax Policy Scholarship Competition 2022

Should the income tax system be reformed to help achieve emissions reduction objectives and, if so, how?

Note to entrants: If you consider the introduction of new tax measures, such as a carbon or other environmental tax, would be better suited than reform of the tax system to support emissions reduction objectives, your submission should detail the tax or taxes you are proposing and explain how they would achieve the objectives sort.

Suggested reading

Chapter 4 of the 2019 Tax Working Group Final Report ‘Future of Tax’

“Transitioning to a low-emissions and climate-resilient future”, Discussion Document, Ministry for the Environment (October 2021): read

European Union Proposal for Establishing a Carbon Border Adjustment Mechanism: read

“Reforming industrial allocation in the New Zealand Emissions Trading Scheme: Consultation document”, Ministry for the Environment (July 2021): read

Inland Revenue is in the early stages of a root and branches review of the administration of the New Zealand tax system. Leveraging off Inland Revenue’s Business Transformation project, and the associated new IT system, SMART, the objective is to streamline tax administration by taking advantage of the vastly enhanced access to data, AI, intermediaries, and other potential innovations. Such radical potential change gives rise to a wide range of privacy and other issues.

Inland Revenue is proposing to issue a Green Paper on Tax Administration in February 2022.That paper, and/or the suggested reading below, may provide ideas for your competition entry.

Suggested reading-   

“Future of tax Administration in New Zealand”- BusinessNZ Tax Group paper, November 2021

“Tax Administration 3.0: The Digital Transformation of Tax Administration”, OECD Forum on Tax Administration , 8 December 2020 Publications – Forum on Tax Administration (oecd.org)

In December 2020 the Government used parliamentary urgency to insert controversial amendments to the Tax Administration Act by enacting new section 17GB. The amendments provide the Commissioner of Inland Revenue extensive powers to gather information for the development of policy for the improvement or reform of the tax system.

The Commissioner has recently used the new information-gathering powers to require detailed financial information from high-wealth individuals and domestic trusts.

A number of potential topics for the competition arise from this reform, and from the two areas the Commissioner has applied it to so far.

Suggested reading

Section 17GB of the Tax Administration Act 1994 as enacted in 2020.

Draft Inland Revenue Operational Statement: Section 17GB notices-the Commissioner’s power to obtain information for tax policy purposes. (Released November 2021)

Sections 6, 6A and 6B of the Tax Administration Act 1994.

Tax Working Group Final Report ‘Future of Tax’ (2019) Chapter 9 at para’s 26 to 30.

“Responding to Ministers on wealth, capital income and effective tax rates in the top decile” (Background Paper for Session 23 of the Tax Working Group): https://taxworkinggroup.govt.nz/sites/default/files/2019-02/twg-bg-4038666-responding-to-ministers-on-wealth-capital-income-and-effective-tax-rates-in-the-top-decile.pdf

The Selection Panel will be looking for creative ideas, original thinking and sound and reasoned research and analysis.

In addition to the above broad criteria proposals will be judged by reference to all or some of the following criteria –

• Impact on the New Zealand economy, including GDP and business growth.
• Social (including distributional equity) and environmental acceptability.
• Feasibility of introduction, including political and public acceptability.
• Impact on simplicity of tax system.
• Ease of administration by taxpayers and Inland Revenue, or other relevant government agencies, and impact on compliance costs.
• Quality of written presentation.
• For finalists, quality of oral presentation.

Applicants should avoid repeating material that is already available, including commentary and analysis from the 2019 TWG report. However, additional analysis of such material, including contrary views if held, is encouraged but must be supported.

1. Expressions of interest are required to be submitted using this form by 5pm on 15 March 2022. Your topic area is not required at this time.
2. A 1,500-word overview of your proposal is required by 5pm on 2 May 2022. The overview must enable the Selection Panel to understand outline your proposal, what it seeks to achieve, and to make an initial assessment of how it meets the judging criteria.
3. Four finalists will be announced at a function to be held on or around 26 May 2022.
4. The 4,000-word final proposals will be required by 5pm on 19 August 2022.
5. The four finalists will be invited to present their proposals, and to answer questions, at a function to be held on or about 20 September 2022. The four winners will be announced that evening.

The Selection Panel will be made up of senior professionals with tax policy experience. The panel is appointed by the Tax Policy Charitable Trust.