Tuesday, June 29, 2010

Taxing the Governor-General

As a former British colony, our law is littered with relics of feudalism. One of these is the tax-free status of the Governor-General. Back in feudal times, tax was levied by the monarch and treated as their personal income. While power gradually shifted to Parliament, this mindset remained - the government was the monarch's, not the people's; Parliament was merely spending the monarch's money on their behalf; and so it made no sense for the monarch to pay money to themselves in taxes. As a foreign agent of the foreign monarch, the Governor-General inherited this exemption.

But times have changed. Our Governors-General are now New Zealanders, rather than foreign aristocrats. And we expect them to pay their share. In the UK, the Queen has "voluntarily" paid income tax since 1993. The Governor-General's tax-free status is now an anomaly.

Fortunately, its about to change. The government has just introduced a Governor-General Bill implementing the recommendations of the Law Commission on reforming the structure for funding the Governor-General. One of these reforms is removing their exemption from tax. The changes will take effect once the incumbent leaves office.

And so another relic of feudalism is sent to the dustbin of history. And hopefully the monarchy will soon be sent there as well.