New Zealand Budget Fails To Deliver On Company Tax Cuts

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

29 May 2001

Despite calls for a reduction in the current company tax rate of 33 per cent, New Zealand's Finance Minister, Dr Michael Cullen, presented his Budget speech last Thursday without a mention of the much-desired tax cut.

The National Party opposition spokesperson, Bill English, urged the government earlier this month to cut the tax rate in this year's budget, saying New Zealand should at least rival Australia's corporate tax rate to attract investment. Mr English argued that a tax cut would "make all the difference" in combating a decline in business confidence that was revealed in the latest National Bank and Institute of Economic Research surveys.

He argued: 'Cuts in interest rates have not been enough to dispel growing concern created by the drought and the downturn being suffered by our major trading partners. The Government was quick to get out the cucumber sandwiches and Earl Grey for business, but has so far done nothing which gives business the confidence it needs to create more jobs and more wealth.'

Chief executive of the Auckland Regional Chamber of Commerce, Michael Barnett, is in agreement. After Dr Cullen delivered his Budget speech, a disappointed Mr Barnet was quoted in the New Zealand Herald as saying: 'With Ireland's company tax at 10 per cent and Australia's now at 30 per cent, we are staying disadvantaged against the countries we want to be competing with for new business and skills. We say we want to be up there with the top group of rich countries, but we are not following their lead by setting a competitive tax for business to look at New Zealand.'

He added: 'Australia's cut in company tax has been known about for months; its importance to business cannot be overstressed and its omission from this budget will, I predict, come back to haunt Dr Cullen.'

Recommended