Still No Real Change

Still No Real Change

In his opening speech to Parliament today Prime Minister John Key has accurately characterised the problems with a tax system that is in dire need a radical overhaul, but has responded with a determination to do no more than tinker say the New Zealand Manufacturers and Exporters Association (NZMEA). We had hoped for more political courage and leadership towards a step change that is needed to address the widely accepted problems in our economy.

John Key acknowledged that the tax system is broken saying, “The Government agrees with the Tax Working Group that New Zealand relies heavily on the taxes most harmful to growth, particularly corporate and personal income taxes; that there is a hole in the tax base around the taxation of property.” However, he then went on to say, “In particular, we will not be developing any proposals for a land tax, a comprehensive capital gains tax, or a risk-free return method (RFRM) for taxing residential investment properties.”

NZMEA Chief Executive John Walley says, “How the Prime Minister expects a broken tax system to be fixed without any changes is beyond me. We hoped for more, sadly it seems we can only anticipate more of the same.”

“The desire to drop the income and corporate tax rates is commendable but jobs follow investment as night follows day, and without balance in fiscal and monetary policy the real economy will be robbed of returns and starved of investment.”

“There seems to be a consensus that broad based, low taxes are fundamental for jobs and growth; what is lacking is the political will to deal with vested interests and make it happen.”

ENDS