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Farmers welcome 27:27:27 tax model

Media Release
4 December 2009

Farmers welcome 27:27:27 tax model

Federated Farmers has expressed its backing of the Tax Working Group’s goal of making 27 percent, the top rate for personal, company as well as trust tax. Yet the Federation was far less keen on some of the options for getting there.

“Aligning tax rates at 27 percent should be a no brainer that will help boost productivity and competitiveness by letting taxpayers save, spend and invest more of their hard earned money,” said Philip York, Federated Farmers economics and commerce spokesperson.

“This is also about reducing incentives that see so much time and effort put into minimising tax. The challenge, of course, is how to fund the $3 billion annual cost of lost revenue at a time of large fiscal deficits.

“We support the Tax Working Group proposals to increase GST to 15 percent, a better targeting of welfare to those in genuine need and clamping down on tax losses from rental properties. The starting point though should be growing the economy. Tax should be the end result rather than a starting point.

“What the Tax Working Group proposes are new and creative ways to cut our economic pie ever smaller, when there are effective and less expensive means to grow the economy and wealth.

“A bigger economy and a smaller Government would easily fund tax cuts without needing to dream up new ways of taking money off people.

“Getting the size of Government right is very important. The Federation strongly supports a goal of containing Government spending to no more than 30 percent of GDP.

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“Where we get concerned is about the ‘base broadening’ ideas such as a capital gains tax, a land tax or Gareth Morgan’s capital tax.

“While we’re glad the Government is cool on the capital gains tax, a land tax still seems to be in the frame. A land tax will be a big cost on land intensive businesses meaning a disproportionate impact on ‘asset rich’ but ‘income poor’ businesses. The same applies to a capital tax.

“Farmers already pay a huge amount in land tax and that’s called council rates. They will reject any attempt at imposing more.

“Let’s face it, the ETS is three-letters spelling tax and with other compliance regimes in the pipeline, such as ACC levies and the proposed National Animal Identification and Tracing scheme, we potentially face a quad pack of new costs.

“A Poll Tax was raised as an efficient but politically unsaleable concept. Then again, if you said there would be an international market based on the trading of CO2 emissions thirty years ago, you would likely to have been laughed at.

“The Tax Working Group has produced high quality work and has been commendably transparent. If it was intended to start discussion it has certainly achieved that. But frankly, a land or capital gains tax are non-starters.

“The focus should be on how to grow the economy instead of screwing more money out of the productive sector and we look forward to engaging further with the Government on this”, Mr York concluded.


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