Cut company tax rate
Wednesday, March 17th, 2004
Adopt Irish route to growth; Cut company tax rate
On this St Patrick's Day National leader Don Brash should have announced his commitment on company tax rates to match the Irish, the Employers & Manufacturers Association (Northern) says.
"By setting the company tax rate at 10 per cent some years ago the Irish triggered economic and jobs growth that's still beating the rest of Europe hands down," said Alasdair Thompson, EMA's chief executive.
"It was so successful Tony Blair's government in the UK picked up the idea. Since then the Brits rate of economic growth has also been beating the rest of Europe, except Ireland.
"In the UK smaller businesses, those employing less than 50 staff and/or earning less than 2.8 million pounds, pay no tax on the first 10,000 pounds of net profit; 19 per cent is levied up to 300,000 pounds.
"Canada and the rest of the Asia Pacific region all followed suit.
"So Dr Brash's commitment to match Australia's 30 per cent company tax level is too timid by far and especially from someone claiming to have a growth strategy for New Zealand.
"We don't need to match Australia's company tax rate or other attractions for business investment; we need to better them.
"At the least the same personal tax rate of 19.5 cents per dollar on earnings up to $38,000 should be applied to companies as to individuals.
"90 per cent of our small and mid sized companies earn net profit less than $38,000 a year.
"Consequently their owners earn no more and often less than the average wage.
"Nonetheless today's announcement is a step in the right direction.
"It acknowledges company taxes are withholding taxes with less imputation credits transferring into higher taxes paid by individual shareholders/owners.
"Hence giving priority to cuts in the company tax rate over the top marginal personal rate is the right move - to maintain and grow our education, health and overall standards of living we first must achieve more investment-led growth.
"We urge both National and the Government to get Treasury and Inland Revenue on side with this programme.
"The sooner they start crunching the numbers for it, the sooner New Zealand will attract more investment and job security here, let alone have the country fall into line with the rest of the world."