The Tax Working Group is recommending a major overhaul of the tax system, including cuts to personal and company tax rates, and an increase in GST.
The group, which comprises academics, private sector experts and officials, was set up last March. It also favours introducing a land tax and wants property investors to be taxed more heavily.
The Government has welcomed the report, released on Wednesday, but will not say yet which, if any, of its recommendations it will adopt.
Under the proposals, the Government could raise an extra $5 billion to $6 billion per year in tax, leaving plenty of scope to cut personal income tax rates and align the top rate with the company and trustee tax rates.
The Tax Working Group says these changes would stop people structuring their affairs to avoid the top personal tax rate. It says there would also be scope for cutting lower marginal tax rates.
Current system unfair - chair
The group's chair, Professor Bob Buckle of Victoria University, says the present tax system is not working effectively, and must be reformed.
"The current system, in our view, is incoherent, it is unfair, it lacks integrity, it unduly discourages work participation and it biases investment decisions," he says.
Professor Buckle says the tax base needs to be broadened to allow personal and corporate tax cuts, while maintaining overall revenue levels.
Changes must be sustainable - Finance Minister
The Finance Minister, Bill English, says the Government is looking for tax changes that are sustainable, and will deliver better incomes and a faster-growing economy.
Mr English says the Government generally agrees with the group's desire for a broad-based tax system where people pay their share.
Mr English says the report will be carefully considered, and any shorter-term decisions will be included in May's Budget.
The Labour Party says the Government needs to take into account social equity issues when considering the Tax Working Group's report.
Labour's finance spokesperson, David Cunliffe, says he has concerns about lifting the rate of GST when other, mainly technical, proposals in the report could still raise a lot of extra tax. But he says using that money to cut the top rates of tax should not necessarily be a priority.