November 5

Alliance welcomes back disenchanted Progressives

The Alliance welcomes back former members currently in the Progressives who will be appalled at Jim Anderton's plan to lower the company tax rate. President-elect Jill Ovens says Progressive members may wish to rejoin the Alliance after Mr Anderton's about-face. But she is not surprised by Mr Anderton's latest announcement because, in the run-up to the 1999 General Election, he advocated that the top personal tax rate of 39 cents in the dollar should not cut in till $80,000. This was $20,000 more than Labour's proposal, which became the top tax rate.

"He told the Alliance Council this was his cunning plan to take votes from Labour. Given the Alliance's position to the left of Labour, those of us who were NLP members naturally opposed such a plan and it went no further," Ms Ovens says. Mr Anderton told National Radio this morning he had advocated within the Alliance that there be no company tax at all.

"This would certainly come as a surprise to most Alliance members, and I would hazard a guess, to most Progressives members as well," Ms Ovens says. He is quoted in the NZ Herald as saying his proposal to lower the company tax rate would send a signal that New Zealand was taking on Australia in competitveness over the "headline" company tax rate.

"Jim used to point out that the Australian tax rates were in fact higher than ours because they pay a number of different types of taxes, so his reference to 'headline' tax doesn't tell the full story.

"He also used to say, quite rightly, that if company taxes were below the top personal income tax rate, high earners would simply form companies to avoid paying their full contribution," she says. A cut to the company tax rate might encourage investment in areas that would make companies the most profit, but the Alliance says it would be more effective for the Government to invest that tax revenue where it will do New Zealanders the most good.

"The economy is doing very well right now, so there is less cause than ever to consider reducing corporate tax, certainly not while we have one-third of our children living in poverty and people on low pay borrowing money at exhorbitant interest rates just to pay the rent."

The Alliance supports a progressive taxation system to redistribute wealth to reduce the gap between rich and poor and adequately fund health, education and social services so that every citizen can fully participate in society.

ENDS

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