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Tax Debate Missing The Point As Usual, Says Dunne

3 November 1999


The current tax debate is missing the point “as usual”, says United New Zealand leader, Hon Peter Dunne.

Mr Dunne, a former Minister of Revenue, says he is “astounded” the Government is even thinking of cutting the company tax rate before it lowers the top personal tax rate.

“The two must go hand in hand.”

“If you cut the company rate without touching the top personal rate, you simply invite high income earners to re-establish themselves as companies to avoid the higher personal rate.”

“The opposite is also true.”

“What amazes me is that National was very quick to make these same points when attacking Labour’s plan to put up the top personal rate, but not the company rate, yet now seems to be falling into the same trap itself,” he says.

Mr Dunne says that a cut in the top personal and company rate of three cents in the dollar has been overdue since the first round of tax cuts in 1996.

“The gap between the bottom rate and the top rate of nearly 14 cents is too wide for good tax design purposes.”

“It already encourages higher income earners to look at ways of restructuring their income to avoid the top rate, and is therefore quite inefficient.”

“Instead of playing games about tax, the real issue now is how to stop avoidance and evasion by better aligning the two rates, and the only way that can be realistically achieved is by bringing down both the company and trop personal rates at the same time,” he says.

New Zealand’s Liberal Party

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