The Sixth National-led government was sworn in on 27 November 2023. Within three weeks, on 19 December, the new Minister of Revenue and National Party MP for North Shore, Simon Watts, introduced a repeal bill under urgency. By the evening of 21 December the bill had passed its third reading. Two days later, on 23 December, Inland Revenue was due to publish its first report under the law the government had just killed.
The law in question was the Taxation Principles Reporting Act 2023. It did not tax anyone. It did not change any rate. It did not levy a single dollar. What it did was require Inland Revenue to publish, once a year, a public report measuring the New Zealand tax system against a set of fairness principles. (RNZ — Parliament repeals tax principles reporting law under urgency)
That report has never been written.
What the act actually did
The Taxation Principles Reporting Act 2023 was the work of David Parker, Revenue Minister in the Ardern and Hipkins governments. Parker had spent two years pushing through the Inland Revenue High Wealth Individuals Research Project, a five million dollar study that tracked 311 of the country’s wealthiest families across six years of returns. (IRD high wealth report) Its central finding, released in April 2023, was that those families paid a median effective tax rate of 8.9 percent on their economic income. The comparable figure for the median New Zealand household was 20.2 percent.
The reporting Act was Parker’s attempt to make that kind of measurement routine. It required Inland Revenue, every year, to report against six principles. Horizontal equity, the idea that people in similar circumstances should pay similar tax. Vertical equity, the idea that the system should be progressive. Administrative efficiency. Compliance cost. Revenue sustainability. And the structure of the tax base itself.
None of those principles were new. They are taught in the first lecture of every public economics course in the country. What was new was the obligation on Inland Revenue to measure, in public, how the actual New Zealand tax system performed against them.
The bill imposed no new tax
A capital gains tax is a tax. A wealth tax is a tax. A higher trustee rate is a tax. The Taxation Principles Reporting Act was none of these things. It was a reporting requirement on an agency that already collected the underlying data.
This matters because almost every familiar argument against tax reform in New Zealand was unavailable. Capital was not going to flee a reporting requirement. Compliance costs were limited to the agency producing the report. The administrative burden fell on Inland Revenue, not on any taxpayer. No marginal rate was going up. No exemption was being removed. No asset was being assessed.
What the Act did was lift the curtain. And, on the timeline written into the Act itself, the first lift was scheduled for 23 December 2023.
The timing
The Act had been on the statute book since August 2023. Inland Revenue had been preparing its first report for the back half of the year. The Green Party’s then finance spokesperson James Shaw noted during the repeal debate that the report was due “on the 23rd of December”.
The new coalition government was sworn in on 27 November. The repeal bill was introduced on 19 December. It passed under urgency on 21 December. Royal assent followed within days.
The new government did not have to repeal the Act in December. It could have repealed it in February, or March, or whenever Parliament resumed in 2024. It could have legislated a delay to the reporting deadline. It chose, instead, to use urgency in the final sitting week of the year to make sure no report under the Act was ever published.
What urgency is for
Urgency is a parliamentary mechanism that allows a government to suspend the standard timetable, bypass the select committee process and pass legislation in a single day. It is intended for matters that genuinely cannot wait. Earthquake response. Banking system stability. The first weeks of the Covid response in 2020. Urgency removes the public’s opportunity to make submissions on the bill. It also removes the technical scrutiny that select committees apply.
The justification offered by Mr Watts for using urgency to repeal a reporting Act was that the Act would otherwise require Inland Revenue to publish its first report before Parliament could deal with it in the new year. (Beehive — Government introduces Taxation Principles Reporting Act Repeal Bill) That justification is true. It is also circular. The only reason the deadline mattered was that the new government did not want the report to exist. Urgency was used not because the report was urgent, but because preventing the report was.
Who voted to repeal it
The bill was moved by the Minister of Revenue, Simon Watts, the National Party MP for North Shore. The Prime Minister at the time was Christopher Luxon. The Finance Minister was Nicola Willis. The two coalition partners were led by David Seymour (ACT) and Winston Peters (New Zealand First).
The third reading on 21 December 2023 passed by a party vote of 68 to 55. Every National, ACT and New Zealand First MP was recorded as voting in favour. Every Labour, Green and Te Pāti Māori MP was recorded as voting against.
The 68 members of Parliament who voted to repeal the Taxation Principles Reporting Act 2023 were:
National Party (49): Christopher Luxon, Nicola Willis, Chris Bishop, Simeon Brown, Erica Stanford, Paul Goldsmith, Louise Upston, Judith Collins, Shane Reti, Mark Mitchell, Todd McClay, Tama Potaka, Matt Doocey, Simon Watts, Chris Penk, Penny Simmonds, Nicola Grigg, James Meager, Scott Simpson, Stuart Smith, Suze Redmayne, Melissa Lee, Andrew Bayly, Nancy Lu, Katie Nimon, Catherine Wedd, Paulo Garcia, Vanessa Weenink, Rima Nakhle, Dana Kirkpatrick, Carl Bates, Carlos Cheung, Joseph Mooney, Sam Uffindell, Tim van de Molen, Miles Anderson, Dan Bidois, Mike Butterick, Cameron Brewer, Hamish Campbell, Tim Costley, Greg Fleming, Ryan Hamilton, David MacLeod, Grant McCallum, Tom Rutherford, Barbara Kuriger, Maureen Pugh and Gerry Brownlee. (Mr Brownlee was Speaker of the House at the time of the vote. Under New Zealand’s party vote system the Speaker is recorded with their party’s tally.)
ACT New Zealand (11): David Seymour, Brooke van Velden, Nicole McKee, Andrew Hoggard, Karen Chhour, Simon Court, Todd Stephenson, Mark Cameron, Parmjeet Parmar, Laura McClure and Cameron Luxton.
New Zealand First (8): Winston Peters, Shane Jones, Casey Costello, Mark Patterson, Jenny Marcroft, Jamie Arbuckle, Andy Foster and Tanya Unkovich.
The 55 members of Parliament who voted against the repeal were the 34 MPs of the Labour Party, the 15 MPs of the Green Party of Aotearoa New Zealand, and the 6 MPs of Te Pāti Māori.
What the report would have measured
The April 2023 high wealth study covered the period 1 April 2015 to 31 March 2021. That window captured most of one property cycle. By December 2023, Inland Revenue had two additional years of tax filings on hand. Those two years contained the peak of the post-Covid asset bubble, the unwind that followed, the surge in cryptocurrency wealth and the early effect of higher interest rates on residential property investors.
The December 2023 report would not have used the high wealth study population specifically. The Act required broader measurement against the six principles. But the methodology that produced the 8.9 percent finding was now institutionalised, and the same kind of analysis, repeated annually, was on track to produce comparable numbers for 2022 and 2023. Some of those numbers may have been less politically uncomfortable than the April 2023 finding. Some may have been more. Either way, the question of how much tax the wealthiest New Zealand households were paying as a share of their economic income was about to become a routine public statistic.
It is not a routine public statistic. The high wealth study has not been refreshed under the current government.
The arguments offered for repeal
Mr Watts framed the repeal as a cost-of-living measure and a reduction in bureaucracy. The Act, he said, would have required Inland Revenue to produce reports that consumed agency resources at a time when the focus should be elsewhere. (Scoop — Government introduces Taxation Principles Reporting Act Repeal Bill) In the chamber, he added that the repeal allowed the government “to pursue the tax policies they were elected to carry out”.
The second statement is the more interesting of the two. The Taxation Principles Reporting Act did not prescribe any tax policy. It did not require the government to do anything other than allow Inland Revenue to publish a measurement. Governments retained complete freedom under the Act to set whatever tax policy they wished. What they could not do, while the Act remained in force, was prevent the country from being told annually whether those policies measured up against the standard principles of tax fairness.
Labour’s then finance spokesperson Deborah Russell made the point in reply. Governments, she said, “are still, always have been, free to set their own tax policies.” The Act did not constrain the policy. It constrained the silence around the policy.
What replaced the act
Two and a half years after the repeal, nothing has replaced the Act. There is no annual public report on the effective tax rates paid by the wealthiest New Zealand families. There is no statutory measurement of the system against horizontal or vertical equity. The data that drove the 8.9 percent finding still exists inside Inland Revenue. The mechanism that would have made it public, on a rolling basis, no longer does.
Tax Justice Aotearoa, the lobby group that campaigned for the Act, characterised the repeal as a deliberate move to remove transparency rather than to remove regulation. (Tax Justice Aotearoa — Repeal of Tax Principles Act undermines transparency)
The stated reasons for repeal
The government offered two reasons in the chamber. Neither stands up.
The first was that the Act would have imposed an administrative burden on Inland Revenue. That claim is hard to take seriously. Inland Revenue already collects the data the Act required to be reported. The Act asked for an annual report. Producing one annual report is not, on any reasonable understanding of the word, a meaningful administrative burden for the country’s largest revenue agency. If it were, the entire system of annual departmental reporting in New Zealand would have to be reconsidered.
The second was that the Act constrained the government’s ability to pursue the tax policies it had been elected to carry out. That claim is simply false. The Act required no tax policy. It set no rate, imposed no levy and exempted no asset. Governments remained completely free under the Act to legislate any tax policy they wished. What they were required to do was allow the country to be told, once a year, how that tax policy was performing against fairness principles.
Neither reason supplies any basis for using urgency.
Urgency is a serious tool. It suspends the standard timetable, eliminates the select committee process and removes the public’s opportunity to make submissions on the bill. It is appropriate where a matter genuinely cannot wait. It is not appropriate to pre-empt the publication of a transparency report by an independent agency.
The only thing that could not wait, in December 2023, was the report itself. The government did not want it to exist. So it used urgency to ensure that it did not.
The Taxation Principles Reporting Act 2023 did not tax anyone. It imposed no rate. It imposed no cost on any taxpayer. It required, once a year, a report on whether the tax system was fair to the country whose taxes paid for the report.
The first such report was due on 23 December 2023. Sixty-eight members of Parliament, organised across three political parties, voted on 21 December 2023 to ensure it was never written. They used urgency to do it. They did so two days before the report would have landed.
Whatever the merits of the various capital gains, wealth and inheritance tax debates, the repeal of the Taxation Principles Reporting Act is not really part of those debates. It is a separate thing. It is a decision about which information about the New Zealand tax system gets to exist in the public domain. The decision was made under urgency, in the final sitting week of the year, by a government that had been in office for less than a month, in respect of a law that was about to tell New Zealanders what their wealthiest paid as a share of their economic income. On its own merits, that decision is not defensible.
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This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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