Hon Jim Anderton

Progressive Party leader

8 October 2008 Media Statement
Progressive Party ads attacks National's plan for highest ever tax increase on business

Election ads due to air from Jim Anderton's Progressive Party attack National's plan to increase tax on business.

The ads, the first to be run in the election season, highlight what Progressive Party leader Jim Anderton said was National's plan to impose the greatest increase in tax ever on innovative New Zealand businesses.

"More tax on innovation is exactly what we don't need in these tough global financial conditions. It's ludicrous. Our job is to keep people in their businesses and keep people earning. The last thing we want is to make it too hard.

"We've just got the tax rate down. The company tax rate has been cut. The tax on research and development has been cut. Assistance for businesses to go global has been increased. In contrast, National has never cut business tax. Now it wants to turn back the clock."

Jim Anderton said that, to maintain our export earnings, it was crucial for businesses to increase private sector research and development.

We already have low levels of research investment, and to penalise businesses who planned to invest in innovation was dangerous and short-sighted, he said.

The 30-second radio ads warn about National's enormous tax increases on business and will air nationwide on Thursday and Friday.

Copies of the ad can be emailed as .mp3 files.

The ad is also being distributed on the Internet.

Backing Up Our Claims

Progressive claim:
National wants to increase tax on innovative businesses.
It will increase tax on businesses more than any government in history.
National will axe the billion dollar Fast Forward innovation investment fund.

Evidence
National Party policy: http://national.org.nz/files/2008/RSandT.pdf
National's promise: "We propose reducing the R&D tax credit to 10%. This will save an average of $105 million per year over the next three years"
National's promise: National will wind up the Fast Forward Fund

This is an increase in business tax, because when the credit is cut a profitable business has to pay more company tax.

The Business Tax Review charted a detailed modern history of business tax in New Zealand. The review shows no government has increased any business tax by as much as National plans to do - $315 million on its own figures.

We estimate that innovation is growing so quickly that the cut will be cost businesses twice as much as National estimates - around $200 million a year. The growth in innovation (and therefore in use of the credit) is National's stated reason for cutting it.

ENDS

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