Surplus shows that Tax Cuts are Affordable

10 October 2007

Fiscal Surplus shows that Tax Cuts are Affordable

Today’s announcement of an $8.7 operating surplus, more than $2 billion more than forecast, provides another strong justification for the government to cut taxes according to the Wellington Regional Chamber of Commerce.

“While we are pleased that the government has achieved a strong and responsible fiscal position, month after month of strong fiscal data suggests that the surplus is not only structural but unnecessarily large and that tax cuts are affordable,” said Chamber CEO Charles Finny.

“The 3 cent reduction in the company rate announced in the budget was welcome but a wider package of tax cuts is needed. Government must take steps to reduce personal income tax as well as company tax.

As for the argument that the timing is not right for tax cuts because of their inflationary impact, we remind government that tax cuts are not inflationary if they are accompanied by a reduction in government expenditure and we believe there is ample scope for this too.

“Tax cuts are not only affordable at this time, they are necessary. A lower, flatter income tax structure and a narrower differential between personal and company tax rates would improve our international competitiveness and boost investment, employment, productivity and economic growth in New Zealand”, Mr Finny concluded.

ENDS

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