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Tax reform debate needs to look to long term

Tax reform debate needs to look to long term best options

The latest Fairfax-Nielson polling on tax reform highlights the need to look past "day one" issues and debate the best long-term tax options for the country.

The New Zealand Business Council for Sustainable Development says only 25 per cent of voters questioned by Nielson want the Government's large surplus spent on tax cuts. Fifty eight per cent would rather see the money invested in public services instead.

The Business Council says the results are similar to ShapeNZ research it published last month showing 58% would say no to a tax cut if it meant lower social, health and education spending. At the same time 72% believed the Government should cut taxes, according to the ShapeNZ survey of 847 respondents nationwide. The weighted results have a maximum margin of error of 3.5%.

Business Council Chief Executive Peter Neilson says it is clear the public would like tax cuts, but do not want to damage the social fabric. They will also support significant tax reform ideas like a 20% single rate funded by increasing GST to 20%, as much as shorter term options, like cutting the top personal rates to either 28 or 30% on incomes over $60,000.

"What we need as tax policy is designed for next year's Budget and election campaigns is a focus on what will deliver the country the most affordable, competitive tax rates which help attract investment and skilled people, and keep skilled Kiwis here," Mr Neilson says.

"The 'day one' impacts of tax changes should not overshadow the need to achieve significant long term gains and we should be bold about it, specially if all of the options provide for the Government to keep spending 31% of gross domestic product, run a surplus and maintain social spending."

"We need a tax plan laid out for ever years if necessary, so we can see where we are going. While we bear in mind Kiwis believe the Government has enough revenue, at $55 billion a year, to give Kiwis a fair go, want to keep more of their own earnings and maintain our quality of life. All are possible. We need to be inventive and look for ways to expand the tax base and lower rates, rather than just extend the tax bands and return the revenue to taxpayers through fiscal drag."

ShapeNZ tax polling and papers are available in full at http://www.budgetsummit.org.nz


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