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


Spending restraint welcome but higher tax not

Media release

25 June 2014

Spending restraint welcome but higher tax not

Labour’s signals of more discipline in spending are welcome, but its higher tax proposals are concerning, says BusinessNZ

Commenting on the alternative budget released by Labour today, BusinessNZ Chief Executive Phil O’Reilly said its costings and commitment to frugal spending would be welcomed by the business community, although he cautioned that some of the costings had been heavily qualified by economists involved.

“Labour’s proposal for a firm approach to tax avoidance by multinational companies is sensible in the interim while international measures to harmonise international tax law are being worked through,” Mr O’Reilly said.

But the centrepiece of the alternative budget – an increase in the top personal tax rate and trust rate to 36 percent – would not aid competitiveness and would penalise those who tended to invest most.

“Higher income and trust tax along with a new capital gains tax are not good signals for anyone wanting to invest in New Zealand’s growth.”

He questioned whether the proposed capital gains tax would raise much revenue, given the proposal included the ability for losses to be offset against capital gains.

He said the proposal to abolish the current targeted R&D funding regime and reinstate general R&D tax credits was surprising given the distortions arising from their past use in other countries.

“General tax credits for all business bring an incentive to claim credits for spending unrelated to research and development, diminishing the amount actually spent on R&D. Targeted grants based on company performance and co-investment are a more transparent form of assistance.”

Another feature of the alternative budget – the proposal for the government to build and sell 10,000 homes every year – would be an unwelcome intrusion of government in the private sector, Mr O’Reilly said.

“The key problem here is local government zoning decisions restricting land supply and pushing up prices. A better intervention would be to require better zoning decisions by local government.”

© Scoop Media

Business Headlines | Sci-Tech Headlines


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news