New Zealand's Finance Minister, Dr Michael Cullen, has rejected the Opposition's demands for a corporate tax cut in the forthcoming budget although he has indicated that the measure may be considered after the election next year.
According to a spokesperson for Dr Cullen, the budget - due to be delivered in mid-May - was set and could not allow for a reduction in company tax, which is currently levied at 33 per cent. She said: 'Basically it isn't possible this year to reduce the corporate tax rate. Michael has always said it's an issue for the next (parliamentary) term . . . and that it would probably be discussed as part of the wider tax review.'
For some time now Dr Cullen has agreed that the government would find it difficult to maintain the current company tax rate due to the global trend of lowering rates and this has become more of an issue with the news that Australia plans to drop its company tax rate to 30 per cent from July 1 this year. Although he has refused the tax cut this year, Dr Cullen has announced that he has requested that the government conducts research into the issues that may arise from reducing the tax rate.
The National Party opposition spokesperson, Bill English, urged the government 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 discovered in the latest National Bank and Institute of Economic Research surveys.
He commented: '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.'
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