Taxation, More Than Exchange Rate, Impedes Exports

Media Release
21 February 2005

TAXATION, MORE THAN EXCHANGE RATE, IMPEDES EXPORTS

Lower taxation and better employment relations laws are the two key factors that would stimulate export growth, according to a survey of New Zealand businesses.

Both beat out a lower exchange rate as a stimulus, as also does better direct financial support from Government.

The findings are contained in the latest Grant Thornton International Business Owners Survey (IBOS), which covered 6000 businesses worldwide, including 150 in New Zealand.

Lower taxation got nearly 80% approval rating as a stimulus for export growth among the New Zealand businesses surveyed (46% said it was "very likely" to be a stimulus and 33% said "somewhat likely").

Better employment relations laws got an approval rating of just over 71% in total.

Better financial support from Government rated 60% and a lower exchange rate scored just 50%.

Grant Thornton New Zealand chairman Peter Sherwin termed the results of the survey "a most interesting outcome."

Said Mr Sherwin: "Clearly, a higher dollar is not quite the bogey that some have considered it to be. Apart from 'Government red tape', which is a complete negative subject on its own, taxation levels continue to be a major issue for New Zealanders in business, and as individuals.

"The fact that taxation is dominant in this survey is yet another signal about what might stimulate exports and economic growth.

"Better employment relations laws is not a surprise element and has shown up in various surveys as being desirable for businesses."

Mr Sherwin noted that the survey found that when New Zealand businesses were asked the direct question "Do you think the current company tax levels should be lowered?" 81% said yes.

When they were asked "Do you think taxes should be more closely aligned with our trading partners?" 78% said yes.

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About Grant Thornton

Grant Thornton is a leading international accounting and consulting group, comprised of independently owned and operated member firms, providing assurance, tax and specialist advice to independent businesses. Grant Thornton operates in 110 countries, bringing together 21,500 people in over 585 offices worldwide. In New Zealand, there are Grant Thornton offices in Auckland, Wellington, Christchurch, Dunedin and Whangarei.

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