Since 1995, New Zealand tax policy has been developed using the Generic Tax Policy Process (GTPP). This process is designed to support robust and effective policy development by ensuring early consideration of key aspects and possible impacts of the proposals, and by providing meaningful opportunities for public consultation
What the process is intended to achieve
The primary objectives of the GTPP are
- to ensure early consideration of key policy elements and trade-offs, including revenue impacts, compliance and administrative costs, and wider economic and social outcomes, of proposals
- to provide opportunities for significant external input into policy development
- to clarify the roles and accountabilities of participants, particularly those of Inland Revenue and the Treasury
From broad option to detailed proposal
Major reforms typically progress through five phases moving from high-level concepts to detailed and implementable proposals:
- Strategic: Development of the Government’s economic, fiscal and revenue strategies. Broad policy proposals may be publicised through Budget and related documentation.
- Tactical: Development of a three-year work programme and annual resource plan to implement the revenue strategy. Initial scoping and development of broad policy options occur at this stage, often supported by early external consultation (for example, through discussion documents).
- Operational: Detailed policy design, consultation and refinement. This stage includes seeking Ministerial and Cabinet agreement to proposals. Discussion documents may be used for consultation, and Policy options may be revised in response to submissions. This culminates in Government approval of initiatives ready for legislation and implementation.
- Legislative: Translation of approved policy into legislation. This phase runs alongside the latter part of the operational phase to enable timely introduction of Bills. Public consultation occurs through select committee submissions.
- Implementation and review: Implementation of legislation, followed by post-implementation review once the rules have had time to bed in. This includes identifying and addressing any remedial issues, with further opportunities for consultation.
Who is responsible for what
The GTPP does not prescribe fixed roles for Inland Revenue and the Treasury. Instead, responsibilities are allocated based on each agency’s expertise and comparative advantage. Inland Revenue is primarily responsible for the operational, legislative, and implementation and review phases. It also contributes to the strategic and tactical phases, alongside the Treasury.
Our role
Inland Revenue’s Policy group leads the end-to-end development and delivery of tax and related social policy. This includes:
- identifying issues through engagement within Inland Revenue, and with other agencies and external stakeholders
- developing policy proposals and managing them through to implementation and review
- managing consultation processes
- supporting Ministerial and Cabinet decision-making
- drafting legislation and managing its passage through Parliament
- reviewing the effectiveness of reforms after implementation.
The policy result
The GTPP ensures that major tax initiatives are subject to public scrutiny throughout their development. This results in better-informed, more practical and durable policy by drawing on external expertise and the experience of those affected. It also supports clearer communication of the rationale for reforms, improving understanding and long-term sustainability.