Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Mixed messages on business tax review

Monday, August 21st, 2006

Dr Cullen, CTU sending mixed messages on business tax review

Finance Minister Michael Cullen's comments on the business tax review are at odds with the CTU's call for businesses to pay higher wages, according to the Employers & Manufacturers Association (Northern).

Dr Cullen has repeated the results of a survey* which he says found 65 percent of CEOs would respond to a cut in the company tax rate by increasing pay rates.

"Dr Cullen is concerned that cutting the company tax rate would raise wages and salaries and he says the Government does not want that," said Alasdair Thompson, EMA's chief executive.

"The CTU wants Kiwi employers to raise wages and salaries but doesn't want cuts to the business tax rate to achieve it.

"Dr Cullen said his survey suggests 'a significant portion of the lost revenue from a straight reduction in the company tax rate would flow through to employees and shareholders, rather than going immediately into investments that increase productivity.' *

"We fail to see this is a bad thing as Government tax revenues would rise faster than currently in subsequent years. Not only would much of the $540 million cost (from the 3 cent cut proposed) be clawed back as tax from staff and shareholders went up, it would gain more tax as a result of rising investment and economic growth.

"If the government was as enterprising as it expects Kiwi businesses to be, it would cut the company tax rate far more than 3 cents thereby encouraging overseas companies to account for more taxable profit here, while increasing their investment and the taxable income of their employees and shareholders here.

"The CTU says it prefers direct tax credits to encourage R&D, skills and market development, rather than cuts to the company tax rate.

"But a significant cut to the company tax rate would boost productivity by doing this while also raising wages and salaries."

* Speech by Dr Cullen in Tauranga, 16/8/2006


© Scoop Media

Business Headlines | Sci-Tech Headlines


Mycoplasma Bovis: More Properties Positive

One of the latest infected properties is in the Hastings district, the other three are within a farming enterprise in Winton. The suspect property is near Ashburton. More>>


Manawatū Gorge Alternative: More Work Needed To Choose Route

“We are currently working closely and in partnership with local councils and other stakeholders to make the right long-term decision. It’s vital we have strong support on the new route as it will represent a very significant long-term investment and it will need to serve the region and the country for decades to come.” More>>


RBNZ: Super Fund Chief To Be New Reserve Bank Governor

Adrian Orr has been appointed as Reserve Bank Governor effective from 27 March 2018, Finance Minister Grant Robertson says. More>>


ScoopPro: Helping PR Professionals Get More Out Of Scoop has been a fixture of New Zealand’s news and Public Relations infrastructure for over 18 years. However, without the financial assistance of those using Scoop in a professional context in key sectors such as Public Relations and media, Scoop will not be able to continue this service... More>>

Insurance: 2017 Worst Year On Record For Weather-Related Losses

The Insurance Council of New Zealand (ICNZ) announced today that 2017 has been the most expensive year on record for weather-related losses, with a total insured-losses value of more than $242 million. More>>