Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Bold Tax Reform Would Spur Enterprise, Excitement

MEDIA STATEMENT
Monday 30 November 2009
Embargoed Until 1.30 pm

Bold Tax Reform Would Spur Enterprise, Excitement and Growth

The 2025 Taskforce has recommended an initial target of restoring government spending as a percentage of GDP to 2005 levels by 2012/13, and using the savings to eliminate the fiscal deficit and make it possible for every New Zealander to pay no more than 20% in personal, company or trust tax.

Everyone earning more than $14,000 a year would pay less tax and such a move would be likely to lead to a surge of enterprise, excitement about the future and stronger economic growth, Taskforce Chairman Don Brash said today. Those earning less than $14,000 a year would continue to enjoy current tax rates well below 20%.

“Everyone on the Taskforce was stunned to learn just what could be achieved on the tax front simply by restoring government spending to the same proportion of national incomes as it was five years ago,” Dr Brash said.

“We believe that just the announcement effect of such a move would lead to firms becoming more excited about investing in New Zealand, immediately boosting prospects for economic growth.

“The longer-term effect would be to make New Zealand overwhelmingly the most attractive place in the world for New Zealanders to work, save, invest and bring their ideas to fruition. It would also make New Zealand much more attractive to others with high-level skills, ideas and capital.

“This would be even more true if our ideas were implemented to bring New Zealand’s regulatory environment more into line with best practice as found in countries such as Canada.”

Dr Brash said the Taskforce was unanimously of the view that unless government spending and tax rates are cut markedly, the Prime Minister’s vision of bridging the income gap with Australia by 2025 cannot be achieved.

Dr Brash said the Taskforce believed that reducing spending as a percentage of GDP to 2005 levels would allow genuinely innovative taxation ideas to be brought to the table, and the Taskforce was highlighting two possible approaches for consideration.

The first would see a top rate of 20% for all personal, company and trust tax. The second would see split rates of perhaps up to 25% for wages and salaries, and 12.5% for profits, interest and dividends.

Dr Brash said there were different arguments for the two options. “Aligning the top personal rate with the company rate may be seen as simpler and leave less room for avoidance. The split rate is based on Scandinavian models which argue that taxes on income from capital simply leads to less investment in plant and machinery, which in turn lowers workers’ productivity, which in turn lowers their wages. In other words, taxes on income from capital are taxes on workers anyway – but with capital being more mobile, the lower the tax on capital income the better.”

Beyond 2012/13, the Taskforce proposed capping increases in government spending to inflation and population growth. This would allow further tax cuts and even more innovative taxation ideas to be discussed.

“The one thing which is absolutely clear is that those economies which have moved quickly from relatively low living standards to relatively high living standards have almost always had either low tax rates or aggressive tax reduction programmes,” Dr Brash said, citing Hong Kong, Singapore, Taiwan, South Korea and Ireland as examples.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Madrid Climate Talks: Decade Ending 2019 Likely To Be Hottest On Record

Exceptional global heat driven by greenhouse gas emissions mean this decade will most likely go down as the warmest on record, according to the World Meteorological Organization...

The agency also finds that 2019 is on track to be the second or third warmest year in history, with the global average temperature during January through October, roughly 1.1 degrees Celsius above the pre-industrial era.

“If we do not take urgent climate action now, then we are heading for a temperature increase of more than 3°C by the end of the century, with ever more harmful impacts on human wellbeing.” More>>

 

NZ First Conflicts Of Interest: New Details Around Timeline

New information has emerged showing it was the New Zealand First chief of staff who identified potential conflicts of interest between a forestry company and two senior government ministers, sparking a series of declarations. More>>

Earlier:

Donations:

Five New Cancer Meds In Six Months: Pharmac Funds More Cancer Medicines, Faster Assessment

PHARMAC has confirmed that two new medicines – olaparib for ovarian cancer and fulvestrant for breast cancer – have been approved for funding... Rituximab and bortezomib, which are already funded, have also been approved for widened access following successful commercial proposals from new suppliers. More>>

ALSO:

Gordon Campbell: On Stoking Fears About Cannabis Law Reform

It was always going to be hard to have a rational debate on cannabis reform. Far easier for politicians to win votes by stoking alarm... More>>

ALSO:

Tūhoronuku Mandate Recognition Ends: "New Opportunity" For Ngāpuhi Treaty Negotiations

The Crown is providing an opportunity for the hapu of Ngāpuhi to rebuild its framework from the ground up for collective negotiations to deal with its historical Treaty claims... More>>

ALSO:

Pike River: Next Phase Of Recovery Underway

“Fresh air will be pumped into the Pike River Mine drift this week, following acceptance of the plan for re-entry beyond the 170m barrier by New Zealand’s independent health and safety regulator WorkSafe." More>>

ALSO:

Peters Stoic: Russia On Afghan Firing Range Deaths

The foreign minister won't be calling in the Russian ambassador concerning comments made about New Zealand soldiers in Afghanistan. In a media briefing late last month, Russian Foreign Ministry spokesperson Maria Zakharova said New Zealand must investigate crimes against civilians. More>>

ALSO:

Christchurch Call: Online Crisis Response Workshop In Wellington

Governments and tech companies are holding a two-day workshop, hosted by YouTube/Google in Wellington, to test the Christchurch Call Shared Crisis Response Protocol. More>>

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 


 

InfoPages News Channels