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Govt officials considering payroll tax

Govt officials considering payroll tax

Finance Minister Michael Cullen has confirmed Government officials are looking at a payroll tax, which, if introduced, could hit Kiwi jobs, says National Finance spokesman John Key.

“I understand that Treasury and Inland Revenue officials are studying such a tax in combination with a cut to the corporate tax rate,” says Mr Key.

“Reintroducing a payroll tax which New Zealand last had in the early 1970s would hit employment – especially in labour-intensive industries. That is because firms would look to minimise payroll costs.

“It may also hit employees, through lower wages.

“In such a study, officials would need to clarify if a payroll tax would also apply to non-taxpaying entities like charities and local government – who employ people but don’t pay company tax.

“In the House, Dr Cullen wouldn’t confirm that this is not just a deck chair-moving exercise in terms of revenue. That leaves open the possibility that this is going to be yet another tax grab at the expense of the productive sector and workers.

“Taxpayers don’t need another tax grab – given that Crown revenue as a percentage of GDP has risen from 38 to 44 per cent over the last six years.

“Business taxes have to come down so we are more competitive with Australia, whose Government is gearing up as we speak for even more tax cuts in its next Budget.”

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