Speculation Mounts Over Possible Tax Cuts In New Zealand

by Carla Johnson, Investors Offshore.com, London

23 November 2007

New Zealand's Finance Minister, Michael Cullen, has added to the mounting speculation over the country's tax system by hinting at tax cuts in next year's budget.

It emerged recently that the Treasury plans to revise its budget forecasts, and speaking before the Parliament's finance and expenditure select committee, Dr. Cullen delivered a hypothetical tax-cutting example which has fuelled already frenzied speculation on the issue.

According to reports in the regional media, responding to Bill English, who suggested the only way in which the Finance Minister could make such a drastic change was simply by cutting down on expenditures, Dr. Cullen stated that:

"At the moment I don't think that's true because Treasury's forecasts tell me that we have headroom that is ongoing over the four-year period for some moderate moves in the taxation area."

He went on to add, according to the New Zealand Herald, that "they would be moderate moves because anything in the tax area is significantly costly. If you are talking $20 a week it is over $2 billion a year."

"The numbers will have some uncertainty about them. Any final decisions around revenue reduction will not be made until the budget,'' he went on to add, according to Bloomberg.

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