Tax reform - significant long term change?

Tax reform - significant long term change?

Last week's Business Council-organised Business Budget Summit was given an indication the Government is likely to take a staged approach to tax reform. Delegates heard talks had been held at the Beehive at which bracket creep and lowering the top rate to 30 cents were discussed. Prime Minister Helen Clark announced the next day tax cuts will be introduced next year. Deloitte research presented at the Summit shows just how much fiscal drag is affecting taxpayers: everyone now on the average wage of $46,000 will enter the top 39c tax bracket in 10 years.

The Summit also heard that pushing out the income tax limits before any new marginal tax rates cut in will not address our international tax competitiveness, specially with Australia, and in their recommendations chief executives urged the new Cabinet to come up with long term tax reduction plans, the way Australia does. Other significant recommendations were made on long term health funding and overcoming the skills shortage and are also detailed here. By this week, professional services firm Ernst & Young was joining the chorus, saying the lack of detail in the Government's tax cut announcement could risk disillusioning voters and do little to sto p New Zealanders moving to Australia.

Meantime, want to cut your tax 35%?
Without tax reform the current system is allowing people to structure their incomes in ways which allow them to pay 35% less tax. Want an immediate cut, in ways which have seen thousands suddenly have peak personal income of exactly $60,000 a year? See the Deloitte and other Summit tax papers here.

Polling points to single tax rate policy coalition?
Final analysis of a ShapeNZ poll on tax reform shows New Zealanders choose a top rate of 30c for personal and corporates (25% support), but a single rate of 20c for personal and corporates, funded by increasing GST to 20%, comes a close second (24%). An option to cut top personal and corporate tax rates to 28c wins 20% support when people are forced to a choice between the three options.

Which parties' voters support the 20c single rate tax ahead of the other options? More Green, New Zealand First, Maori Party and ACT voters support the single rate ahead of other options. National are 27% for the 28c option and 24% for the single rate. Labour voters are 29% for the 30c option and 17% for the single rate.

A credible policy which delivers tax cuts while maintaining social equity is critical to a party's success at next year's election: a significant 62% of voters say tax policy will influence how they cast their party vote next year. The ShapeNZ tax research results are here.

We love our migrants but.
Seems the days of scoring points off fears of new migrants have come to a close. ShapeNZ nationwide research shows eight out of 10 believe skilled migrants can add to social diversity and improve New Zealand's way of life, and more believe that the effects of recent overseas migrants entering their own communities have been more positive (40%) than negative(16%). However, please speak English: there is a marked reluctance (70%) to reducing English language standards for skilled new migrants.

Economists' reports dress up campaign for emissions subsidies
The country has seen two reports in as many weeks, backed largely by high energy users, calling for a go slow on introducing the emissions trading regime. The latest report this week came from the Greenhouse Policy Coalition asking if the Government was leading the country out onto a limb. Like the earlier one from the New Zealand Institute saying the country should stay right behind the world on the issue, the reports' releases were pre-arranged and in one case placed for exclusive first use by the New Zealand Herald. Ironically, its editorial the next day opposed the institute's suggested approach. The Business Council argued against the go slow and pointed out the Coalition's report gave no evidence to support continuing taxpayer subsidies for emitters - already available for some until 2025.

US enterprise gets on with private trading scheme
In contrast to the orchestrated effort to delay the New Zealand emissions scheme by calling for more detailed impact analyses, US businesses are getting on with their own trading scheme, well ahead of the Government. Avista this week became a member of the Chicago Climate Exchange (CCX), the world's first and North America's only voluntary, legally binding integrated greenhouse gas emissions reduction, registry and trading system. The CCX allows participants to earn credits for reducing greenhouse gas (GHG) emissions and trade the resulting financial instruments at market prices.

As part of its membership in CCX, Avista has voluntarily committed to achieving greenhouse gas emission reductions of six percent below baseline by 2010. The baseline is the average annual emissions from 1998-2001. CCX operates a cap-and-trade system, and members who exceed the targets have surplus allowances to sell or bank and those who have emissions above the targets must purchase CCX Carbon Financial Instrument contracts to achieve compliance. Third-party verification is provided by the Financial Industry Regulatory Authority (FINRA), which is the leading financial regulator in the United States.

Countries team up share information on emissions trading
A small number of European states have joined up with US and Canadian regional cap-and-trade initiatives to share information about emissions trading systems. The new group hopes to act as a driver for the creation of a wider, international carbon market in advance of key UN climate negotiations in Bali.

Most ready for 'green sacrifices'
Meantime, most people are ready to make personal sacrifices to address climate change, according to a BBC poll of 22,000 people in 21 countries. Four out of five people indicated they were prepared to change their lifestyle - even in the US and China, the world's two biggest emitters of carbon dioxide.

Has Chevron heard of Marlborough's sewage ponds?
Chevron Corp has announced it will partner with the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) to research ways of turning algae into transportation fuel. Have they heard of New Zealand's Aqua Flow Group which has already done it at Marlborough? The Kiwi breakthrough is detailed on page 30 of the Business Council's Business of Climate Change special publication of July 10

Big developments in renewable energy
Business Council member Contact Energy has announced plans for the country's biggest wind farm, capable of generating up to 650 megawatts when fully developed on coastal land near Port Waikato. The Business Council describes it as an example of what most Kiwis want for their energy future.  Meantime, Meridian  has won consent for the 630 MW Project Hayes wind farm development south of Ranfurly on the Lammermoor Range, about 70 km north-west of Dunedin. And Windflow Technology Ltd, the designer and manufacturer of the Windflow 500 wind turbine now in commerc ial production, has announced this week it is mailing its shareholders the prospectus for a 1 for 4 renounceable rights issue and attached separately tradable options.

How 32% of your customers may move when they find out about you

New research covering the growth of the Consumers who Care/ Solution Seeker market in New Zealand - people who expect companies to provide them with products and services which empower them to help address issues which concern them - has been unveiled. Details on presentations and research from a special Top 40 Advertisers' Briefing, organised by the Business Council, are available here. They include a new world-first database development allowing you to buy media specifically targeting this growing audience. more »

IBM to offer energy-efficiency certificates
IBM Corp (also a Business Council member here) has launched the world's first corporate-led energy efficiency certificate program, trailblazing a way for information technology companies to measure and potentially monetize energy reductions.

Rental car companies start carbon-offset initiative
Three rental car companies -- owners of a combined fleet of more than 1 million vehicles --  have just launched what could become the industry's largest carbon offset program.

Connecting climate change, companies, and financial performance
Laying the groundwork for new investment products, Innovest has releases the first study relating how companies manage climate change risk to their financial performance.

Food industry rejects 'carbon label' idea
The European Commission is currently drawing up action plans on sustainable consumption and production. Details of the plans remain unclear, but the food and drink industry is urging the EU executive not to propose 'misleading' labels, such as those which focus only on the CO2 'impact' of products.

Fonterra's energy efficiency efforts earn awards
Fonterra's energy efficiency drive has seen the company collect two awards at the 2007 EECA EnergyWise Awards, one for saving the equivalent of the power bill for Hamilton.

Events
For information on sustainablility-related events please click here

New instant news service
The Business Council has introduced a new 24 x 7 instantly updated news service, covering climate change, emissions trading, and other sustainability issues. It draws on up to 50,000 databases worldwide and is available here

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