Signaled tax changes make sense

Matching the top income tax rate for individuals and trusts is critically important, and it was good to hear Finance Minister Bill English say so today, says Alasdair Thompson, chief executive of the Employers and Manufacturers Association (Northern).

“If New Zealand could get the top personal and trust income tax rate down as low as the company tax rate needs to go to make New Zealand internationally competitive, that would be ideal. But the government deficit will make dropping the top personal and trust rates that low very difficult to achieve.

“It is reassuring to hear the Finance Minister acknowledge that the New Zealand company tax rate had to be competitive internationally, and especially so with Australia.

“The proposed increase in GST to 15 per cent, and either ring fencing business profits/losses from individuals’ incomes or not allowing depreciation on buildings that don’t depreciate, will help fund the income tax cuts proposed for all income levels. Cutting government costs will still be needed to fund the balance.

“Increasing GST acts to encourage needed savings. And too many people have been making money from highly leveraged property investments, subsidised by taxpayers,” Mr Thompson says.