Tech giants must pay their fair share of tax according to Prime Minister Jacinda Ardern. A government proposal may see digital service providers such as Facebook, Apple and Google pay more tax on the income they earn from New Zealand consumers.
The announcement comes before the Tax Working Group releases its recommendations to the government on Thursday, with speculation it may include a capital gains tax, which National vehemently opposes.
National leader Simon Bridges, whose party has recently dropped in the polls, says the announcement is a distraction from the supposed looming capital gains tax announcement.
"They haven't worked out any of the details," he says, "We saw that from Jacinda Ardern today. She can't answer the basic questions about retaliation, about compliance, about what the companies may do when faced with this. If they think it's going to make a capital gains tax more popular somehow they are badly out of luck."
But Revenue Minister Stuart Nash says otherwise. "We are not announcing a capital gains tax in any way shape or form- all we're doing on Thursday is releasing the report from the Tax Working Group."
Ardern says the government is currently looking at a tax range of 2-3% based on international models, which is estimated to potentially bring in between $30mil-$80mil annually.
Tax advisor Geof Nightingale says the move could affect Māori businesses providing digital services.
"There's Māori businesses that export digital services. They might suffer this tax in other jurisdictions. Our Māori businesses are involved in our export industry and exporting trade products and there's just a caution that we don't want the taxation of gross revenue to spill over into affecting our exports because that could be a pretty significant thing for NZ."
The Green Party has welcomed the tax and is calling for an end to companies like Facebook and Google exploiting New Zealand tax laws.
Co-leader Marama Davidson says, "New Zealanders pay their fair share of tax, so why shouldn't other international companies working within our country?”
A discussion document will be released in May.