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Two standards of taxation based on race

Two standards of taxation based on race

The National Party says the Government is poised to rubber stamp new laws, which give tax breaks to certain Maori organisations.

“It comes hard on the heels of the new Local Government laws passed just before Christmas which grant special privileges to Maori,” says National’s Revenue spokesman Dr Lockwood Smith.

“Under Labour’s proposed law, Maori authorities, including those running significant businesses, will be taxed at a new favourable rate of 19.5% while businesses run by people of European descent, or any other ethnic groups, will continue to be taxed at 33%,” says Dr Smith.

“This will clearly provide a significant competitive advantage for businesses run by Maori authorities,” he says.

“Chen Palmer and Partners told a Parliamentary Select Committee that the changes would provide a $70 million windfall for Maori authorities in the fishing industry alone.

“They also add that discrimination based on race is contrary to the Bill of Rights Act 1990.

“In a further submission, Price Waterhouse Coopers told the Parliamentary Committee that it wouldn’t be difficult for Maori businesses, with their help, to access the very favourable 19.5% tax rate.”

Dr Smith says the first taxation legislation to be debated by Parliament this year will confirm the current rates of income tax for all other New Zealanders, except the Maori organisations that are to receive the favourable treatment.

“The tax legislation will lock in a tax burden that Business New Zealand told the Parliamentary Committee was too high to sustain the higher economic growth the Government claims to be seeking.”

However, Dr Smith agrees the current tax treatment of Maori authorities is unsatisfactory.

“There is not a full imputation system applying to all tax paid by Maori authorities at present and that needed to be changed.

“However, that could have been fixed without establishing a new system of favourable tax treatment based on race.

“No other organisations with low income members or shareholders will be able to get the same favourable treatment,” Dr Smith says.

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