Michael Cullen Mulls Tax Holidays For Foreign Investors

by Mary Swire, Tax-News.com, Hong Kong

28 February 2002

New Zealand's Finance Minister announced at a Select Committee hearing into his Budget Policy Statement that he is considering proposals to introduce tax holidays for foreign investors in New Zealand, but that the issue will not be addressed in his May 23 budget.

Speaking on Wednesday, Michael Cullen told MPs that the proposal to allow investors bringing money into the country a seven year tax holiday on income from that money, which was formulated following last year's comprehensive review of the country's tax system, 'was a very interesting idea', which he would be looking into.

The committee questioned Dr Cullen and the Treasury Secretary Allan Bollard about plans to increase sustainable growth over the next five years, and about the potential for lower tax rates in order to stimulate growth. However, neither minister chose to comment on the latter.

The Finance Minister revealed that although the tax holiday proposal will not be included in his forthcoming budget, there will be measures to stimulate investment in New Zealand. He revealed that he is generally upbeat about the state of the economy, commenting that the 'downside risks' posed to the country's economy by the events of September 11 and the global economic downturn 'now looked less than they did at that time [in December, when the Budget Policy Statement was released]'.

However, he admitted that further deterioration in the Japanese economic situation did pose a substantial risk to the New Zealand economy.

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