Low company tax rate sensible capacity building

Low company tax rate sensible capacity building instrument

Media statement
Wednesday, November 19th, 2003

Low company tax rate sensible capacity building instrument

Reducing the company tax rate is, as United Future points out in its support for it today, a useful way to build the capital base of our businesses, the Employers & Manufacturers Association (Northern) says.

"We think both National and United Future are setting their sights far too low in wanting the company tax reduced only to 30 per cent," said Alasdair Thompson, EMA's chief executive.

"New Zealand should be aiming to match the company tax rates of Canada and the UK for small businesses.

"We should be aiming for 20 cents in the dollar in say, six stages over the next 6 years.

"Under Tony Blair's 'Third Way' the company tax for small businesses is zero on the first 10,000 pounds of earnings and just 19% on earnings up to 300,000 pounds.

"Small businesses in the UK are defined for this purpose as those either employing less than 50 people and/or earning less than 2.8 million pounds and/or with balance sheet assets up to 1.4 million pounds.

"The main UK company tax rate is below New Zealand's at 30%. (www.inlandrevenue.gov.uk/rates)

"Tony Blair's Labour government knows the important role played by small business and the disproportionately high compliance costs they have to meet.

"Tax on company earnings up to $200,000 in Canada is 12% with tax on earnings over $300,000 scheduled to go to 21% next year. www.fin.gc.ca/toce/2002/faster_e.html)

"New Zealand has the highest company tax rates in the OECD and Pacific Rim countries.

"The main reason for lowering them is to boost investment in wealth creating business for the benefit of all New Zealanders."

ENDS

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