Taxing Questions Bring Differing Answers

Media Release
Embargoed until 05:00am Wednesday 9 May

Taxing Questions Bring Differing Answers From New Zealand Businesses

New Zealand businesses have spoken, and they very firmly say the country’s company tax rate should be the same as Australia’s

But, surprisingly to some, only 31.3% are in favour of a common New Zealand tax rate among companies, trusts and individuals at the top level.

The findings flow from New Zealand-specific questions in the 2007 Grant Thornton International Business Report survey.

Asked whether the New Zealand company tax rate should be reduced to match that of Australia, 88.7% said “yes” and only 9.3% disagreed (the remainder gave no answer).

By a lesser margin, but nonetheless a majority (54.7%), New Zealand businesses voted against a common tax rate, with 31.3% in favour, and the remaining 14% undecided.

“This should give politicians a good lead at least on what business wants,” said Grant Thornton New Zealand’s Taxation Service Line Director, Greg Thompson, spokesperson for the accounting and business advisory firm.

“In some quarters there has been a push for a 30-30-30 regime, meaning a top tax rate of 30% common to businesses, trusts and individuals. But that view has obviously only limited support and that will surprise some people,” he said.

“On the other hand, I doubt whether the heavy support for New Zealand to have the same company tax rate as Australia will come as any real surprise. However, the finding does again contain a message for Government.”

Poll tax not favoured

In a separate section dealing with local authorities, nearly half of businesses rejected the idea of a form of public poll tax instead of traditional council rates.

“This outcome is very timely, given that there is a local government rates enquiry panel looking at this question of local body funding right now,” said Mr Thompson. “The view of 48% is that a public tax should not replace rates, although 32% did support the move.”

“The whole question of taxation and other forms of revenue-gathering is high in people’s minds and politicians at both central and local government levels, as well as bureaucrats, will need to keep their focus on the subject.”

In a subsidiary question, businesses were asked whether there were too many, too few, or just the right number of local authorities in New Zealand.

“A significant majority, 77.3%, said we had too many local bodies, and this result was not unexpected,” said Mr Thompson. “Just 20.7% said the current number was just right and only a couple of per cent were undecided.

“The outcome will no doubt be a boost in particular for the proponents of single councils for Auckland and Wellington.”

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