Dunne urges Key to keep up
Wednesday, 9 August 2006
Dunne urges Key to keep up
Revenue Minister Peter Dunne says he's pleased National's finance spokesman has entered the debate on New Zealand's business tax arrangements, but he's urging John Key to do his homework better.
"There is nothing new in Mr Key's ten-point shopping list of what he thinks the Business Tax Review should cover," says Mr Dunne.
"The government is already working on most of the items he lists, whether through the Business Tax Review itself or as part of the government's tax policy work programme, which was announced in March.
"In many cases work has been under way for several months, including a review of non-resident withholding tax treaty rates and a review of the controlled foreign company tax rules - reviews he says we should undertake.
"The Business Tax Review discussion document, released last month, is a key part of the work programme. The review is concerned with business tax, not personal tax. It seeks the public's views on a range of possible business tax changes for helping to boost growth and productivity, and invites suggestions for other ideas.
"The discussion document is not a finished blueprint, a detailed road map that is imposed upon the public. Instead it is the first step in engaging in a dialogue with the public about how it thinks we as a country should proceed.
"The ideas set out in the discussion document are practical ones. For example, it raises the possibility of introducing targeted tax credits for R & D activities. Tax credits would be more practical than the 100% tax deductions for all R & D that John Key calls for merely because the businesses that need help most may not be able to use deductions.
"New businesses may be putting everything into research and development, with no money coming in the door, for the first few years. They may be operating at a loss for that period so would not be able to make use of a tax deduction for their R & D expenditure.
"On the other hand, a tax credit of between $7 and $15 for every $100 spent on R & D would be of great use to those companies - and, at a tax rate of 33%, would be the equivalent of a tax deduction of 121% to 145%.
"Reducing tax-related compliance costs for businesses is a continuing activity for the government, and measures to reduce those costs are a regular feature of the tax policy work programme and of every taxation bill introduced in the last decade. The discussion document also sets out further compliance cost reduction measures to complement what has already been achieved and asks businesses what others they would like to see considered
"The discussion document seeks to build on progress we have already made and provoke meaningful debate on which business tax changes could help us to do better in achieving our economic goals," Mr Dunne said.