New Zealand's Employers And Manufacturers Association Presses For Corporate Tax Cuts

Mary Swire, Tax-news.com, Hong Kong

05 April 2001

The New Zealand press reported this week that the country's Employers and Manufacturers Association (EMA) has been angling for a cut in the corporate tax rate to boost the economy of New Zealand.

The EMA used the occasion of its submission to the current ministerial review of the tax system to suggest that tax on companies should be reduced by two per cent every year until it reaches 20%. The present corporate tax rate is a flat 33%.

Alasdair Thompson, the EMA's chief executive, was quoted as saying that company tax reductions would lift economic activity, job numbers, and government tax revenue. He stated: 'The announcement of a staged reduction in company tax rates over a six year period would capture the imagination of local and international investors. New Zealand needs a strong and sustained boost to investment in green fields projects if we are to reclaim the high standard of living we enjoyed three decades ago.'

Australia's corporate tax is set to fall to 30% as from July 2000, which would obviously put New Zealand at a disadvantage if its rate does not at least match that of its neighbour. Mr Thompson said company tax last year contributed just 13 per cent of the total tax take, and that a programme of progressive company tax cuts would drive up the tax take in other areas, such as in PAYE or other taxes.

The EMA also proposed in its submission the rejection of capital gains taxes or any increase in the Goods and Services Tax.

Recommended