No Money In Kitty For Business Tax Breaks
Promises of tax breaks for business will come to nothing - because Michael Cullen needs all the Government's available cash to make his super fund credible, National Finance spokesperson Bill English said today.
"The Government should have told the forum it has already decided that pre-funding superannuation is its top priority, as set out in Cabinet papers.
"Helen Clark came out of yesterday's forum talking about further tax concessions for R & D despite Michael Cullen's announcement confirming no concessions.
"There's also talk of tax breaks for foreign investment and donations to universities.
"But Dr Cullen's super fund already rules out a lot of the decisions the Government could make. There won't be enough money to maintain the Budget surpluses, feed the super fund and make good the promises at the business forum.
"Already the surpluses are under threat because of the shrinking economy. Dr Cullen says he will also put $500 million into the super fund next year, about one quarter of the $2 billion required in future years. This small contribution is critical to the credibility of his scheme, but it means the Government won't be able to meet the high expectations it has now generated in the business community.
"The reality is that for decades, there simply wouldn't be enough surplus revenue to afford meaningful tax breaks alongside all the other ideas the Government has for spending money.
"This raises the issue of whether the super fund straitjacket is the right choice when we need to get the economy up and running. This is an early opportunity to see the trade-offs required to put $2 billion a year into the super fund," Mr English said
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