The New Zealand government will release "bold" Business Tax Review proposals for consultation by mid June 2006 at the latest, Finance Minister Michael Cullen and Revenue Minister Peter Dunne announced on Tuesday.
According to the Ministers, the review is a key part of the post-election confidence motions with the United Future and New Zealand First Parties, and is aimed at giving better incentives for productivity gains and improved competitiveness with Australia.
Since clinching a narrow victory in September's election, the ruling minority Labour government is dependent on the support of these two parties.
“Although the scope of the review is still being considered, we envisage some very bold measures emerging. It will not be a matter of tinkering with the tax rules,” the Ministers commented in a joint statement.
“Lifting labour and capital productivity is critical to raising New Zealand’s sustainable growth rate and to restoring New Zealand to the top half of the OECD in terms of per capita income. The review will be integral to this process,” Dr Cullen added.
While Mr Dunne, who leads the United Future Party, has stated that the slowing economy presented "challenges" for tax reform, he stressed that the need to remain competitive with Australia, which is New Zealand's biggest trading partner, made it essential that the tax review process be "wide-ranging and timely".
United Future and New Zealand First are both calling for a cut in New Zealand's 33% corporate tax rate.
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