Surplus - cut business tax sooner

Media release

11 October 2006

Surplus - cut business tax sooner

The $11.5 billion surplus means the government could easily bring forward the planned 2008 business tax cut, says Business NZ.

Chief Executive Phil O’Reilly says the size of the surplus means the business tax reduction from 33 to 30 cents planned for April 2008 could be brought forward to April 2007.

“The last time the business rate was cut, in 1989, business tax revenue actually went up,” Mr O’Reilly said.

“In the decade before 1989, revenue averaged around $1 billion a year, while in the decade after, it averaged nearly $3 billion a year - in other words, revenue nearly tripled.

“So there are good reasons for cutting business tax - it stimulates business and economic growth.

“We now have a massive surplus that is not stimulating the economy in any way but is simply a drain from taxpayers’ pockets.

“It should be put to use in a way that truly benefits New Zealand,” Mr O’Reilly said.

ENDS

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