This is an abridged version of a submission by Superu’s Chief Executive Malcolm Menzies to the Tax Working Group on its terms of reference:
It seems odd to us that the role of families and whānau in developing and maintaining social and cultural capital is overlooked in the terms of reference for the Tax Working Group. Scant attention is paid to the interface of families and whānau with the economy and the tax system. Yet it is this interface (and the interface with the system that transfers wealth via the benefits system) that makes it either easier or more difficult to combine family or whānau responsibilities – such as raising children or caring for the sick or elderly – with participation in the economy.
Unfortunately, the interaction of the tax system with the transfer system is outside the scope of this review. We note that the Tax Working Group will be able to recommend further reviews be undertaken on specific issues which the group considers it has not been able to explore sufficiently… We believe that the tax/transfer interface is one of those issues.
…Family form interacts with systems of taxation and transfer and has impacts on wellbeing. The classical ‘nuclear family’ upon which much social policy has been based is but one among a multitude of family and whānau types that have developed. Income tax is still assessed on an individual basis but eligibility for many components of social assistance, and the amount a person is entitled to, is based on relationship status. The difficulties associated with defining ‘what is a family’ (or whānau) make relationship-based criteria highly problematic.
Superu has shown that one-parent families with younger children face additional stresses in comparison to two-parent families, yet there are elements of the taxation/transfer systems that disincentivise the formation of new relationships or ‘punish’ those who are in relationships already. The answer may be to individualise entitlements, thus enabling people to freely form whatever family and whānau relationships they wish (and to be better equipped to, for example, ride out loss of income and/or up-skill during periods of absence from the workforce).
- That the contribution of families and whānau to the development of social and cultural capital (core elements of Treasury’s Living Standards Framework) be explicitly recognised and supported by the Tax Working Group.
- That the Tax Working Group recommends a full review of the impacts of the benefits/transfers interface, with a view to enhancing the resilience of families and whānau and boosting productivity.
You can read the full submission here: Superu letter to Tax Working Group April 2018