Problem yes, but Labour’s solution unrealistic
18 JULY 2017
FOR IMMEDIATE RELEASE
The Taxpayers’ Union’s Economic Fellow, Jim Rose, says that Labour’s diverted profit tax does not add up, pointing to the additional revenue the Party claims will result as “totally unrealistic given the relative size and makeup of the New Zealand economy”.
“Labour’s claimed revenue gain is twice as much as the Australian Government is projecting from its own diverted profit tax,” points out Mr Rose. “That is despite the Australian economy being six and a half times larger than New Zealand’s.”
Mr Rose adds, "Comparing Labour’s revenue forecast of $200 million to the United Kingdom’s forecast revenue of £350 million, for effectively the same policy, makes it look even more unrealistic. London is a global financial centre where plenty of companies should be banking their profits at their London-based global headquarters, so would presumably gain the most from tax reallocation measures.”
“The Taxpayers’ Union support sensible reform of transfer pricing rules, not politicians trying to screw up tax law and dictate politically negotiated tax bills on companies it puts in the gun. Predictable, rule-of-law based transfer pricing regimes are the only way to encourage international companies to invest more of their resources into our economy.”