New Zealand's Revenue Minister Pledges Major Business Tax Review

by Mary Swire, for LawAndTax-News.com, Hong Kong

10 March 2006

Speaking earlier this month at the 2006 Conference of the International Fiscal Association, Peter Dunne, New Zealand's Minister of Revenue, pledged a review of the country's business tax regime.

He told delegates attending the conference that:

"The tax policy work programme that I am announcing today includes three important items that were part of the post-election confidence and supply agreement that I signed on behalf of United Future with Labour."

"They are:

• A major review of business tax rules, with a view to ensuring the system works to give better incentives for productivity gains and improved competitiveness with Australia;
• The development of a new tax rebate regime for charities; and
• The preparation of a government discussion document on the merits of income splitting for families."

He continued:

"The business tax review will involve a substantial commitment of tax policy resources and may include consideration of a variety of tax policy issues that may overtake the items on this interim work programme."

"A finalised tax policy work programme to June 2007 will be announced after the resource and policy implications of the business tax review become clearer."

"The taxation bill introduced in May last year is under consideration by the Finance and Expenditure Committee, which is expected to report back to Parliament in time for passage of the bill by the end of March."

"That wide-ranging bill introduces a number of major reforms. They include major changes to the tax depreciation, fringe benefit tax and securities lending rules. They also include the introduction of measures to make tax easier for small businesses and measures to improve our access to worldwide capital, skills and labour."

"May 2006 will see the introduction of another taxation bill, the first of the year."

Meanwhile, New Zealand's Finance Minister, Michael Cullen hinted earlier this month that he would be prepared to cut the country's 33% rate of corporate tax in order to improve its competitiveness relative to Australia, its nearest and largest competitor.

Dr Cullen told Parliament's finance and expenditure committee that the government's review of business taxation would be considered a success if its conclusions allowed him to cut company tax.

However, as ever, Dr Cullen sounded a cautious note over the public finances, arguing that tax reform must be carried out within the constraints of the budget.

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