New Zealand Party Challenges Government To Reduce Corporate Tax

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

11 September 2002

The New Zealand Government's hold on power is dependent on the support in Parliament of the United Future party, which has used the power this gives it for the first time to challenge the Government to cut the company tax rate to 30%.

United Future's finance spokesman Gordon Copeland says small businesses are spending too much time collecting GST, PAYE, ACC levies and Fringe Benefit taxes; he says the Government should repay small businesses for the work they do and reduce the tax rate from the current 33%.

Minister for Small Business Paul Swain has ruled out any such reduction, but Mr Copeland has now written to the Minister of Finance asking him also to consider a reduction in the tax rate.

United Future's call echoes recent appeals from the country's Employers' and Manufacturers' Association. In July, Chief Executive of the Northern division of the Association, Alasdair Thompson urged the government to reduce the corporate tax rate from 33% to 20% in order to increase the country's competitiveness on an international level.

Revealing that: 'New Zealand's 33% company tax rate is now higher than the average in the Asia-Pacific region, or in the OECD. Twelve OECD countries cut their rates last year, including Australia,' Mr Thompson criticised the NZ government's current policy mix, arguing that a predicted growth rate of 3% per year for the next four years will not get the country back into the OECD top ten, which is their stated intention.

'As Chris Abiss, senior tax partner for KPMG pointed out this year, New Zealand's company tax rate has to remain internationally competitive along with other business costs. If it remains out of kilter for long, we lose out on new direct investment, and on the opportunity to present New Zealand as a profitable place to operate,' Mr Thompson concluded.

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