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Tax reductions achievable

Media release
1 September 2005

Tax reductions achievable

Lower company and personal taxes would be good for the economy, Business NZ Chief Executive Phil O'Reilly said today.

He was launching Tax Perspectives, an analysis of how reduced taxes would be achievable through constraining the rate of increase in government spending.

"Tax Perspectives does not endorse any political party's platform, but provides a practical example of how tax reductions could be achieved. Business has been calling for lower tax for 20 or more years, and this publication sets out the calculations showing how it could be done."

Mr O'Reilly said capping government spending at 30% of GDP could be achieved within five years, and that would allow lower personal and company tax rates.

"This sort of cap would be a relatively mild measure that would not diminish services like health, education or welfare. It would still allow 3.1% annual growth in nominal spending. Yet it would achieve savings of $21 billion over five years, easily paying for tax cuts."

Mr O'Reilly said the calculations in Tax Perspectives did not take into account the stimulus that tax reduction would provide to the economy. "Given the likely boost to growth the reductions would spark, it is conceivable that the $21 billion savings could be achieved even sooner."

He said Tax Perspectives was designed as a constructive addition to the debate on tax.

Tax Perspectives is on www.businessnz.org.nz.

ENDS

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