UF Maintains Pressure To Cut Company Tax Rate
For immediate release
Tuesday, October 01, 2002
United Future Maintains Pressure To Cut Company Tax Rate
United Future New Zealand continues to argue that the Government should reduce the corporate tax rate from 33 per cent to 30 per cent.
The party’s tax spokesman, Gordon Copeland, said today that in a list of twenty key priorities aimed at returning New Zealand to the top 50 per cent of the OECD, Business New Zealand places a reduction in the corporate tax rate at number two on the list.
“They advocate reducing the corporate tax rate in stages from its current 33 per cent to 25 per cent by 2005 and 20 per cent by 2010.
“United Future agrees and urges the Government to reduce the rate to 30 per cent within the current parliamentary term,” he said.
Mr Copeland said a reduction in the corporate rate also recognises the high compliance costs incurred by companies in collecting tax revenue for the Government.
“It costs the Government around $440 million to collect PAYE, FBT, income taxes and GST. It is not unreasonable to assume therefore that collectively, it also costs companies about that amount each year to collect and pay over those taxes to the Government.
“The costs are tax-deductible so, at the 33 per cent rate, the net costs to business would be around $295 million.
“At the current 33 per cent rate, companies are budgeted to pay $4.955 billion in tax during the current financial year. Accordingly a “compliance cost offset” at $295 million could be achieved by reducing the rate from 33 per cent to 31 per cent.”
“However,” Mr Copeland said, “why not round it down immediately to 30 per cent to bring the NZ corporate rate in line with our Australian neighbours?”