The Tribune

By NATARI0 McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE government’s tax reform process would engender “greater confidence” if it followed exactly the same model of private sector engagement as New Zealand, the tax coalition’s co-chair stating, “We’re on a completely different path”.

Gowon Bowe, who is also a PricewaterhouseCoopers (PwC) accountant and partner described the New Zealand Value-Added Tax (VAT) implementation in 1986 as a “successful but unique” model for the government to embrace. Mr Bowe noted that the New Zealand model which saw private sector involvement from the outset was unlike the government’s present approach.

Mr Bowe who met with New Zealand tax experts Dr Don Brash and John Shewan last week noted that in the case of New Zealand, implementation and design private sector committees had been formulated at the outset and garnered private sector support. “An approach like that from the very beginning would have gotten much further ahead today as opposed to feeling like it was a government driven initiative that was being forced onto the people. I don’t think it’s too late for that. We can step back and implement some of those private sector initiatives to help and and make sure that the design and implementation is done in a collaborative effort as opposed to what we see now. If we had taken it on-board the way they had in its entirety I would have greater confidence that the path they have chosen would be successfully implemented but there are quite a number of divergent points or actions that we have taken,” said Mr Bowe.

He went on to explain: “We have a number of exemptions. We have price control and they didn’t. We have a whole slew of implementation challenges that we haven’t yet worked out. Their model was a successful model but a unique model for the government to embrace with the help of the private sector.”

“One of the biggest complaints expressed by the business community at large is that there have been a lot of meetings with the government but you haven’t had any tangible responses as to what would be actually taken on-board and bot taken on board. I think the VAT design committee as in the case of New Zealand was a very smart thing to do. The other thing they mentioned was a VAT coordination office which they set up and was chaired by a private sector individual. They did a whole series of training leading up to VAT implementation but it also existed for another 9-12 months after the implementation date. They were able to take on board the hiccups and criticisms as part of the implementation and they mentioned that within the first year they had about three amendments to the legislation . The government was very innovative in that they immediately focused on the private sector and really were able to garner that support by having a design committee and coordination office both chaired by private sector individuals and had the input and support of the government.,” said Mr Bowe.

Mr Bowe said that the resistance from the private sector to the government’s efforts had come about due to a lack of collaboration from the beginning, adding that if the government had included the private sector in the design and implementation process there would be greater buy-in at this point. Mr Bowe also noted that New Zealand had brought about expenditure reform, enacted a Fiscal Responsibility Act and had moved to an accrual basis of accounting which he has been advocating for for some time. “They didn’t come at it in one jump. In reality it did happen over a 10 year period,” said Mr Bowe.