Open Access Te Herenga Waka-Victoria University of Wellington
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Good tax policy on shaky ground? An assessment of tax policy responses to natural disasters

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Version 2 2023-09-26, 23:56
Version 1 2021-11-22, 09:08
posted on 2021-11-22, 09:08 authored by Palmer, Carolyn

Recent years have seen a series of natural disasters place significant social and fiscal strain on a number of economies. Determining the appropriate tax response to natural disasters involves multiple complex policy decisions, which often need to be made under significant time pressure with limited information. While natural disasters are predicted to become more frequent and costly, there has been little focus on the links between tax policy development and responses to natural disasters. In particular, no research has systematically compared international tax policy responses to natural disasters.  This thesis outlines the tax responses in the pre-disaster, disaster response, and post-disaster recovery stages of the 2010/11 Canterbury earthquakes in New Zealand and the 2010/11 Queensland floods in Australia. By summarising the responses in this way, a useful resource for future tax policy makers has been created. These tax responses are evaluated against the standard economic principles of good tax policy, and an investigation is made into the relationship between the responses and the strength of the existing tax policy system, as measured by OECD, World Bank and other expert reviews. As part of that investigation, individual case studies are presented that dissect 44 semi-structured interviews with tax policy makers from Australia and New Zealand, selected to represent the views of government officials, tax practitioners and tax academics. A large number of legislative documents, policy reports, formal reports, technical guidance, submissions, academic literature and media items prepared by these policy makers are also analysed.  The analysis shows that both countries had a range of pre-existing rules for dealing with natural disasters but there were gaps and a lack of consistency, which were more pronounced in New Zealand. The immediate response in both countries involved significant administrative effort, and in New Zealand there were a large number of legislative changes which reflected the comparative lack of pre-disaster tax settings. New Zealand also made a large number of changes to support post-disaster recovery. Such changes were not required following the Queensland floods, because timing issues for revenue expenditure and the timing or taxation of capital expenditure had previously been addressed by earlier generic tax changes and Australia’s comprehensive capital gains tax (CGT). While both countries were forced to consider funding options for recovery, pressure was mitigated in New Zealand by high levels of public and private insurance, allowing the New Zealand government to rely on existing taxes and increased debt. The Australian government, which did not have a disaster fund or insurance scheme, implemented a one-year flood levy. New Zealand also supported reconstruction through tax incentives. In contrast, no such measures were proposed or enacted in Australia, due to existing rules, Australia’s comprehensive CGT, and the extensive range of Australian government disaster recovery grants which reduce pressure for tax incentives to aid recovery.  The empirically-based patterns from the two case studies suggest that countries with stronger existing tax policy systems have tax responses to natural disasters which align more with the standard economic principles of good tax policy, even when they are less prepared for an event. However, any weaknesses will also be reflected in the tax responses made.


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Date of Award



Te Herenga Waka—Victoria University of Wellington

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Author Retains Copyright

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Degree Grantor

Te Herenga Waka—Victoria University of Wellington

Degree Level


Degree Name

Doctor of Philosophy

Victoria University of Wellington Unit

Centre for Accounting, Governance and Taxation Research

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Victoria University of Wellington Item Type

Awarded Doctoral Thesis



Victoria University of Wellington School

School of Accounting and Commercial Law


Gemmell, Norman; Marriott, Lisa