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National's proposed tax cuts good for growth

22 August 2005

National's proposed tax cuts good for growth

Today's announcement that a National-led government would lower the burden of taxation offers scope for improved productivity and growth, Business NZ says.

Business NZ Chief Executive Phil O'Reilly says New Zealand's tax levels have to be competitive internationally in order to grow the economy and provide a high standard of living.

"Reducing personal tax rates would provide incentives for individuals and families to get ahead by working hard, knowing that they will keep more of their earnings. This is preferable to turning a large segment of the working age population into beneficiaries. "The proposal to drop the company tax rate to 30% is also a welcome step towards improved competitiveness, although it would be preferable to make the change immediately rather than wait until April 2008.

"Carbon taxes would harm our ability to compete internationally, so it is positive to see a firm commitment not to impose a carbon tax.

"Overall, the policy is positive for growth, and we do not believe it would cause inflation. The reality is that increasing government expenditure is more likely to fuel inflationary pressures than tax cuts, since tax cuts would give more choices to individuals and families about how they used their money, either through savings, targeted expenditures or longer term investment."

ENDS

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