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Tax Cuts Will Benefit Us All

National Party Deputy Finance Spokesman

17 March 2004

Tax Cuts Will Benefit Us All

Claims by Finance Minister Michael Cullen that a cut in the company tax rate serves to benefit only foreign companies should be dismissed as short-sighted, says National Party Deputy Finance spokesman John Key.

"Dr Cullen must recognise that corporates make their investment decisions based on the headline company tax rate, so lowering the company rate will only lead to more investment and the creation of better quality jobs for New Zealanders," Mr Key says.

"Lower company taxes have played a significant role in the growth story of an overwhelming number of successful countries.

"Dr Cullen's comments smack of hypocrisy following the Government's introduction of a policy that gives $40 million tax break to foreign film makers - or are wealthy Hollywood studios somehow special? "The OECD, an expert body with regard to economic growth, endorses National's proposal. Its latest report says 'an option that should at least be considered is reducing the statutory corporate tax rate'. "Lower corporate tax encourages business (domestic and foreign) investment - an important driver of economic growth. It's also worth remembering that the vast majority or those who would benefit from National's tax regime are small companies that earn net profits of less than $38,000 a year. "Attracting foreign investment is absolutely critical in a small economy like New Zealand - many countries around the world are lowering corporate tax rates to compete for foreign investment.

"It's time that Dr Cullen took a fresh look at this issue," says Mr Key.

Ends

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