Outraged developers in Queenstown have blasted a proposal before the Government suggesting radical changes to the tax system.
Yesterday the Tax Working Group, a think tank set up to look at the tax system, published their findings.
The report labels the tax system broken and recommends a range of changes including introducing a land tax on all properties and raising GST from 12.5 per cent to 15 per cent.
The measures would be balanced by lowering the top rate of tax to at least 33 per cent from 38 per cent and compensating beneficiaries and superannuitants for the rise in GST.
It says the burden for paying tax is falling on workers who do not receive working for families benefits while the wealthiest earners are avoiding tax by shifting income into trusts, rental properties and other savings vehicles.
But several Queenstown developers reacted angrily to the land tax recommendation, with one predicting it could lead to another recession.
Developer Bob Robertson said the proposal was ridiculous and would also hurt farmers, who were struggling to run a profitable business.
Things were already tough for developers and there was "zero" money available from banks for projects, he said.
Mr Robertson doubted the proposal would be adopted by the Government but if it was it could trigger another recession.
"Frankly I don't mind, I've got enough money, I'll just shut up shop and sell some property but I fear for the country really," he said.
Remarkables Park developer Alaister Porter said he was reluctant to comment without reading the report but he had already had discussions with the Government about the land tax.
The implications of the tax on quality property development had not been understood by the group and he was confident it would not be adopted once this was pointed out, he said.
Queenstown Lakes District Mayor Clive Geddes was also reluctant to comment without reading the report but was concerned about a rise in GST.
Overseas visitor numbers were "just hanging in there" and anything that would increase the price of travel needed to be considered carefully, he said.
Tourism Industry Association chief executive Tim Cossar said the changes, particularly GST, could reduce the international competitiveness of New Zealand's multi-billion dollar tourism industry.
Finance minister Bill English responded cautiously to the recommendations. He said the Government wanted a tax system that encouraged savings and helped families get ahead while moving away from a preoccupation with borrowing and consumption.