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Slim pickings for exporters in 2007 Budget

Slim pickings for exporters in 2007 Budget

17 May 2007

The Government is moving in the right direction, especially with a drop in company tax, but it doesn’t go far enough, Bob Walters, CEO of Export New Zealand, said of the Labour Government’s 8th Budget released today.

Cutting company tax in place of tax credits is a disappointment. However, without support for market development, many small to medium-sized enterprises will be disappointed the government has decided not to provide tax credits for market development assistance also, Mr Walters said.

The Government has allotted $87.7 million for the Export Market Development Assistance Scheme over four years, which works out to about $22 million a year. In the 2006 Budget, the Government made a $64.2 million increase for market development for companies trying to break into key markets overseas.

“It’s a disappointment and getting grant money means overcoming any number of bureaucratic hurdles,” Mr Walters said. Government grants are an inefficient method of distributing money to businesses. This is not an improvement over previous years, he noted.

But allowing New Zealand-controlled companies based in overseas markets to be tax-exempt is a welcome change.

“Export New Zealand is pleased that New Zealand will be more closely aligned with other countries’ international tax and, hopefully, this will stimulate foreign direct investment in more New Zealand companies,” Mr Walters said. “This should help us grow our foreign direct investment in the country, this is something that has been lagging for a long time.”

But, although the change puts New Zealand in line with Australia, it doesn’t really give our country a competitive edge in the international market, Mr Walters noted.

He also welcomed the 15 per cent tax credit for research and development. “I hope exporters take advantage of that.” It will be useful as Kiwi companies continue to develop niche products for the world market.

But Export New Zealand would like to see continued tax cuts to improve our international competitive position and particularly to boost New Zealand Trade and Enterprise’s support in offshore markets to help exporters grow their businesses.


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