Media Release March 5th, 2001

R&D tax rule changes wanted asap please, Dr Cullen, plus lower corporate tax rates

Business is pleased Finance Minister Dr Cullen is about to introduce a bill to Parliament containing new tax rules applying to R&D, the Employers & Manufacturers says.

"New Zealand business wants Government to honour its pre-election pledge to allow the full write off of R&D expenses in the year they are incurred," said Alasdair Thompson, EMA's chief executive.

"But we understand the complexities that the issue raised for Government and IRD.

"We want to reassure Government that business has no desire for New Zealand to copy Australia's policy on the tax treatment of R&D because we think there are better ways to attract investment here than theirs.

"But we still need urgent bold initiatives to ensure our economy gears itself faster for transformation into a knowledge based economy than at present.

"In his announcement last Friday about the new R&D tax rules, Dr Cullen said they would apply to the 2002-2003 tax year but could be brought in sooner if there was a clear call to do so. We are making that call.

"But what would make a real difference to the investment outlook would be if, at the same time, cuts in our corporate tax rates were to be foreshadowed.

"Meanwhile business is increasingly keen on Science Minister Pete Hodsgon's venture capital funding proposals. In combination with the new R&D tax rules they appear a dynamic way to focus our state funded science related investment onto innovation and technology development projects."

Further comment: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951 (hme)
025 982 024

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