Tax report refreshing step ahead

To catch up with Australia we need an efficient, fair tax system that does not obstruct growth, but since that’s miles from what we have, the recommendations of the Tax Working Group are in general extremely timely and welcome.

“Its refreshing to see the report say our tax system relies too heavily on taxing income because everyone agrees more income is a good thing,” said Alasdair Thompson, EMA’s chief executive.

“So we’re pleased to see the recommendation to raise GST to 15 per cent or more to fund cuts to personal and company income tax rates.

“We totally support getting our company tax rate competitive with other countries to promote investment. New Zealand is lagging woefully in this.

“We need 1.8 per cent GDP growth each year more than Australia to catch them. To achieve that our businesses must be encouraged to retain far more of their earnings for re-investment.

“New Zealand company taxes are amongst the highest in the world. In 1989 our company tax rates were sixth highest; now they are 22nd highest (OECD Tax database).

“To catch Australia company tax should be cut to 20 per cent or less and imputation credits removed.

“We also support reducing top personal tax rates to retain and attract higher skilled people here.

“We agree with the majority of the Tax Working Group in opposing a capital gains tax but are relaxed about cutting depreciation on rental buildings.

“We’re not keen on a land tax as this would likely fall most heavily on urban land. If more tax is needed we support using the efficient GST.

“We’re pleased the report gives the Government plenty of options while setting a direction for tax reform in time for this year’s Budget.

“But we note that international tax rate pressures including the results of the Henry Tax Review in Australia will impact on what changes the government ultimately decides.”