Wellington, Dec 17 NZPA - The Governor-General should pay income tax, the Law Commission is recommending.

However, in a report released today it said the change would be symbolic rather than financially significant because the Remuneration Authority would no longer calculate the salary on a tax-free basis.

The Law Commission, which advises the Government, said it considered there was no longer any justification for the Governor-General's salary to be exempt from income tax.

"The Queen has voluntarily paid income tax on her private income since 1993," it said.

"The government of Australia introduced federal legislation to remove the exemptions from income tax on salary enjoyed by the Governor-General and state governors."

The commission also wants repeal of a law that gives the Minister of Finance the power to exempt the Governor-General from paying local taxes, duties, rates, levies or fees.

It said no such exemptions were in place and it was a hangover from the time when vice-regal appointees came from overseas.

Law Commission president Sir Geoffrey Palmer said modern law was needed to cover the office of governor-general, and the report contains a bill drafted for the Government to consider.

"The office is vitally important to New Zealand's constitution," he said.

"The office is an important symbol of our nation. The Governor-General stands above political differences to provide a sense of national unity and identity."

Sir Geoffrey said the office also demonstrated the fact that New Zealand was a constitutional monarch.

"There is both real and symbolic importance in having these provisions that relate to the Governor-General in separate legislation."