New report shows why tax cuts should be linked to sustainability gains

A new report shows why it is vital to link company tax cuts in the Budget to energy efficiency investments and other sustainability measures taken by companies, Green Party Co-Leader Russel Norman says.

“The need to link tax cuts to energy efficiency has been forcefully underlined by this week’s Grant Thornton International Business Report, which reveals that New Zealand business is lagging far behind its trading rivals overseas, " Dr Norman says. .

“In the Thornton Report, New Zealand ranks 25th out of 32 economies surveyed when it comes to taking action to prepare for increasing energy prices, and for embarking on measures to conserve energy. Poor energy efficiency is both a cost drain on business and a burden on the environment.

“As Grant Thornton New Zealand spokesperson Peter Sherwin says, we are now at a global tipping point when it comes to environmental management, and those companies that don’t take action to mitigate energy costs are putting their international competitiveness at risk.

“Much has been made of our competitive standing with Australia when it comes to headline tax rates. Yet as the Thornton report indicates, the Australian business sector is undertaking more energy and environmental initiatives than New Zealand.

“Clearly, we need to use the tax system to create incentives for businesses to invest in energy efficiency measures," Dr Norman says.

“Instead of just giving away a billion dollars in straight company tax cuts the Government has got plenty of room within tax cuts of that magnitude to offer rewards and encouragement for the kind of measures that actually benefit New Zealand, such as energy efficiency gains.

“If the company tax cut is not linked to real gains for New Zealand there is nothing to stop the rewards flowing overseas in the form of increased profits and dividends for the overseas owners of New Zealand companies.

“As we have seen repeatedly with companies such as Telecom, big overseas owned companies are likely to use increased profits for increased dividends rather than re-investing in New Zealand, and in the future productivity of the company," Dr Norman says.

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