New Zealand Business Must Wait Until 2008 For Tax Reform

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

02 February 2006

New Zealand's Finance Minister, Michael Cullen has fended off criticism of the government's perceived dallying over important new business tax reforms, arguing that such "bold" changes cannot be introduced overnight.

The review of business taxation forms a key part of post-election confidence-building measures with the United Future and New Zealand First Parties, and is aimed at giving better incentives for productivity gains and improving competitiveness with Australia.

However, in a recent interview with National Radio, Dr Cullen stated that the reforms will not be ready to be enshrined into legislation for at least two years.

"In practical terms any major taxation moves, which are restructuring moves of this sort, you would be looking probably at 1 April 2008 for introduction of change," Dr Cullen explained.

The minister went on to add that such a "significant change" in the nation’s tax laws calls for a process of consultation requiring comprehensive input from the tax industry.

At the same time, Dr Cullen has rebuffed statements from opposition National Party leader Don Brash that the government could improve New Zealand's competitiveness by cutting the corporate tax rate to 30% from 33% by arguing that the reforms go beyond merely "tinkering" with tax rates.

"This a complex task, but one that could pay real dividends for the economy," Dr Cullen has stated,

Draft proposals on business tax reform are scheduled to be published for consultation by the government in mid-June.

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