Prebble Speech: A 28 Cent Company And Personal Tax
ACT Calls For National to Adopt a 28 Cent Company and Personal Tax Rate Policy
Wednesday 10 Apr 2002 Richard Prebble Speeches -- Taxation (view HTML version at: http://www.act.org.nz/item.jsp?id=22296 )
Speech by Hon Richard Prebble, Leader ACT New Zealand,
to a seminar organised by Chapman Tripp,
Level 35, ANZ Centre, 23-29 Albert Street, Auckland
on Wednesday, 10 April 2002 at 5.15pm
Business is a key voting group - and in New Zealand that means small business.
National has traditionally had the business vote. But ACT's share is steadily increasing, with ACT now having the support of most CEOs.
Labour, with its business-friendly offensive, has realised the critical importance of the business vote. And Jim Anderton, having abandoned the Alliance, is telling reporters that his social welfare for business can win him business support.
ACT's polling shows Mr Anderton is deluded. He will get zero support from business.
Business does respect Helen Clark's decisiveness. But the increase in the top rate of tax by 16 percent to 39 cents, and increasing compliance costs from the Employment Relations Act, ACC, OSH and the Resource Management Act means Labour's on-the-ground business support is negligible.
National and ACT's polling shows that business is overwhelmingly looking at voting for ACT or National.
National until recently was not concerned about ACT's prospects - we are both on the Centre-Right. When ACT is at 6 percent, National is happy. But the possibility of ACT at 15 percent and 20 MPs, has National worried.
The issue between us is tax. Bill English, both as Finance Minister and now as leader of National, does not personally support tax cuts. He believes New Zealanders are wedded to cradle-to-the-grave welfare and to big-spending government - which means high tax rates.
He is concerned at National's low vote among the over 65s. Just 26 percent of superannuitants voted National last election - a group that is usually conservative.
It was the over-65 vote that elected Labour. Senior citizens are very sensitive to changes in government spending. They don't care much about tax because they are out of the workforce.
ACT believes tax is an area that needs leadership. ACT, National and Labour agree that we need to grow the economy at 4 percent a year, to become a First World nation again. Four percent is twice our present rate of growth.
No country has ever grown at 4 percent where the government takes 40 percent of the Gross National Product. To reach First World status again we need a prosperity-creating tax cut.
Most of National's caucus know this. The caucus in February voted for a 25-cent company tax rate. Their advisors pointed out that a company rate of 25 cents while leaving the top personal rate at 39 cents, would just create a tax avoidance industry.
The National caucus is now considering a company rate of 30 cents and a personal rate of 33 cents - and saying in their next term they will look at reaching 28 cents. A four-year promise does not excite the voter.
I hope National has another think. ACT has polled small business extensively and small business does not believe that a 33 cents tax rate will be enough to get First World prosperity.
The ACT Party has made a detailed study of the $1 million McLeod Tax Report. National should read it. I have written a very easy to read summary in ACT's latest book, Old Values - New Ideas.
A 28-cent tax rate for business and personal tax is achievable today. If we also adopt McLeod's suggestion and drop the 19.5-cent rate to 18 cents, we can give every working person a tax cut - a winner for the Centre-Right.
The cost would be just $2 billion - the same as the Cullen super scheme. If we also cut waste, such as Kiwibank, Air New Zealand bailouts, Maori TV, Closing the Gaps and unemployment benefit for artists, we could save $2 billion easily.
If National and ACT were to agree to go straight to a 28 cent tax rate for business and personal tax, I think we could mount a very credible challenge to Labour.
The government has agreed New Zealand must grow at 4 percent. But Labour has no strategy to achieve this.
Everyone agrees a 28-cent tax rate - well below Australia - would help create prosperity. If National doesn't take a lead on tax, then it is gifting ACT the small business vote.