The History of Death Duties and Gift Duty in New Zealand

The aim of this article is to provide an account of the history of death duties and gift duty in New Zealand. This is worth doing for two main reasons. First, the story of these taxes’ rise and demise constitutes a significant aspect of the country’s fiscal and political history. It might even be said that the story of New Zealand’s death duties is essentially the same story as the country’s political history, but cut at a novel angle. More particularly, whilst there currently seems to be very little enthusiasm for the reintroduction of death duties in New Zealand (except, perhaps, as a necessary accompaniment to a capital gains tax), these taxes for many years enjoyed broad political support. Indeed, it was widely regarded as obvious that a significant part – perhaps as much as 50 percent or so – of every large estate ought to go to the state. There seems, then, to have been a profound change in popular attitudes.Secondly, the reform of the tax system is a process which, it seems safe to assume, will never be completed; even the system’s basic structure seems perennially up for debate. It seems obvious that the process of tax reform might benefit from an awareness of what has gone before; yet the literature on the history of New Zealand’s tax system remains incomplete. One of the aims of the article, therefore, is to make a contribution to the filling of one of the larger gaps in it. More particularly, there has been much discussion recently of the possibility that New Zealand should, like most of the rest of the developed world, introduce a tax on capital gains. If such a tax were to be introduced, it would be necessary, according to the view prevailing in most of the rest of the developed world, to support it with some form of death tax (or, at least, to structure the capital gains tax so as not to exempt inherited capital gains). But this aspect of the question seems to have received relatively little attention. If, however, there is to be a capital gains tax, and if it is to be accompanied by the reintroduction of a death tax, it might be useful to take into account the history of this form of taxation, as practised in this country.