Tax cuts now - Business NZ

Media release
18 December 2003

Tax cuts now - Business NZ

The Government should take heed of calls to relieve some of the tax impact on businesses, individuals and economic growth, says Business NZ.

Chief Executive Simon Carlaw says tax cuts are affordable.

"Core Crown revenue is expected to remain around 34% of GDP for the next five years, well above Business NZ's recommended target of 30%. The operating balance is likely to be between 3-4% of GDP over the same period - that's a large and sustained surplus. Gross Crown debt is likely to fall to around 20% of GDP by 2008 and once the NZ Superannuation Fund is considered, the Crown will also have become a net lender."

And Mr Carlaw says the Government's growth predictions indicate that tax cuts are needed to provide the stimulus for the growth rates needed to reach the top half of the OECD.

"While growth is likely to remain around 3% for the next 5 years, put in per capita terms this will be more like 2% - insufficient to catch up to the OECD average let alone the top 10. This needs a greater growth promoting focus - including tax cuts.

"Our 33% corporate tax rate is already very uncompetitive against Australia's (30% and soon to be lower still) corporate tax rate. Similarly, our 39% top rate of personal tax kicks in at a very low threshold by international standards, giving New Zealanders, including many small businesses, a heavier tax burden than most. Recent petrol tax and border security fee announcements show that taxation is generally and steadily increasing, not decreasing - the opposite of what is happening elsewhere in the OECD."

ENDS

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