Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Low company tax rates spur investment and growth

Low and 0% company tax rates could spur investment and growth

Canada's 21% company tax rate and the zero company tax rate levied in the UK for start up businesses are just two models New Zealand should be examining for their potential here, the Employers & Manufacturers Association suggests.

"Dropping the company tax rate is becoming normal international practice," said Alasdair Thompson, EMA's chief executive.

"Most other countries are dropping their company tax rates to reward entrepreneurialism and spur growth.

"Canada and the UK are dropping their company tax scales every year. Most other countries have lower company tax rates than ours, including Australia, Ireland and Singapore. Twelve countries in the OECD cut their company tax rates last year; none put them up.

"Canada's tax rate on all business earnings will be 21% by 2004. The UK has just cut its tax rate for company earnings up to 10,000 pounds from 10% to zero.

"Essentially company tax is a withholding tax that doesn't add to Government's ultimate revenues from tax - after a company has paid tax, dividend imputation credits allow its shareholders to claim it back.

"But a low company tax rate represents a powerful driver of investment and economic growth as new businesses are attracted, and all companies are encouraged to retain earnings for re-investment in expanded capacity, skills and jobs, rather than paying out earnings to shareholders.

"New Zealand companies pay out a higher proportion of earnings to shareholders than anywhere else at 82% of earnings.

"New Zealand is risking the potential of this measure. If we were an early adopter we would attract investment dependent growth.

"Not only is Canada reducing its company tax rates each year, but the earnings level at which the cuts kick in are also progressively phased down.

"Tax on company earnings up to $200,000 in Canada has already been dropped to 12% with the tax rate on earnings of $2-300,000 last year dropping to 21%. This year the tax rate for company earnings over $300,000 was reduced to 25% and is scheduled to go to 21% by 2004. (www.fin.gc.ca/toce/2002/faster_e.html)

"The UK's Chancellor of the Exchequer, Gordon Brown, recognised the incentive for growth created by lower company tax rate by announcing cuts to the UK's company tax rate structure.

"The UK Budget this year, as well as introducing the zero rate for the first 10,000 pounds of earnings, saw small company tax rate reduced from 20% to 19% for earnings up to 300,000 pounds. The main UK company tax rate is below New Zealand's at 30%. (www.inlandrevenue.gov.uk/rates)

"Small businesses in the UK are defined as either employing less than 50 people and/or earning less than 2.8 million pounds and/or with balance sheet assets up to 1.4 million pounds.

"At present we have amongst the highest company tax rates in the OECD and Pacific Rim countries.

"Cuts to the company tax scales are urgently needed as a key ingredient for lifting our economic performance back into the top half of the OECD.

"It's hard to understand Government's reluctance to use lower company tax rates to grow our GDP. There's no advantage from being last cab off the rank on this issue."

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Peters/Ardern Triumph

There are a lot of good reasons to feel joyful about this outcome. It is what so many young voters – the best hope for the country’s future – wanted.

Far more important than the implications for the Economy Gods ( is the dollar up or down? ) last night’s outcome will also mean many, many vulnerable New Zealanders will have a better life over the next three years at least.

Yet the desire for change was in the majority, across the country..>>>More


Reaction

Labour on its agreement |Peters: Post-Election Announcement Speech | Greenpeace “cautiously hopeful” about new Government | ACT - Madman on the loose | E tū ecstatic | Chamber welcomes the outcome | Greens on their joining Govt | EDS welcomes new govt | Immigrant groups worry | Feds ready to engage new coalition government | Labour Ministers of the Crown announced

 

Climate: Increasing Greenhouse Emissions Hit NZ

New Zealand is seeing impacts of excess greenhouse gas emissions in our climate and oceans, according to the latest national report from the Ministry for the Environment and Stats NZ about the state of the atmosphere and climate…More>>

ALSO:


Wellington.Scoop: Arrests At Blockade Of "Weapons Expo"

“We encourage people in Wellington to get down to the Westpac Stadium now for a day of awesome peace action. There will be plenty of food, music and activities to keep us sustained through the day.” More>>

ALSO:

Rorschach Restructuring: PSA Taking Inland Revenue To Court Over Psychometrics

The Public Service Association will be seeing Inland Revenue in Employment Court over its intention to psychometrically test employees reapplying for their roles at the department as part of its controversial Business Transformation restructuring plan. More>>

ALSO:

Nuclear Disarmament: Nobel Peace Prize 2017 Awarded To ICAN

Congratulations from iCAN Aotearoa New Zealand to international iCAN, the other iCAN national campaigns and partner organisations, and the countless organisations and individuals who have worked so hard for a nuclear weapons-free world since 1945. More>>

ALSO:

Expenses: Waikato DHB CEO Resigns

An independent inquiry has identified that Dr Murray had spent more than the agreed $25K allocated for relocation costs, and other unauthorized expenses involving potential financial breaches of the chief executive’s obligations. More>>

ALSO:

Wellington.Scoop: Sad About The Trolley Buses?

The Regional Council’s MetLink is today spending money to tell us that it really loves Wellington’s trolley buses, even though they’re all being taken off our roads by the end of this month. More>>

ALSO:

Post-Election: Preliminary Coalition Talks Begin

New Zealand First will hold post-election preliminary discussions in Wellington with the National Party tomorrow morning and the Labour Party tomorrow afternoon. More>>

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election