IR briefing 'constructive contribution'
Revenue Minister Peter Dunne today welcomed the Inland Revenue Department's briefing to the incoming Government as a 'constructive contribution to the government's work on tax issues'.
"The Commissioner of Inland Revenue points out that New Zealand's substantial company tax base is at risk because of our relatively high reliance on corporate tax as a revenue source and the relatively high foreign ownership of companies," he said.
"He also says we have to regain our competitive tax advantage over Australia, which means the future of the trans-Tasman tax relationship needs to be considered as a matter of priority.
"This is entirely consistent with the confidence and supply agreement United Future and Labour signed which says there will be 'a review of the current business taxation regimes with the view of ensuring the system works to give better incentives for productivity gains and improved competitiveness with Australia'," said Mr Dunne.
Mr Dunne noted that the latest report from the think tank, the New Zealand Institute, pointed to the need for New Zealand to improve its labour force productivity dramatically if it wishes to rise in the OECD standings and improve living standards.
"The review I am leading will address all these issues," said Mr Dunne.
The briefing is available online at www.taxpolicy.ird.govt.nz.
Contact: Ted Sheehan, Chief Press Secretary to Hon Peter Dunne, Tel: 04 470 6985, Cell: 021 638 920
Review of corporate tax regime on the agenda
"The concerns raised by the Treasury and Inland Revenue regarding company tax will inform the government's planned review of the business tax regime," Finance Minister Michael Cullen said today.
He was commenting on the IRD's and the Treasury's briefings to the incoming government.
"The terms for the review are still being drawn up but will reflect the government's commitment to give better incentives for productivity gains and improved competitiveness with Australia."
Dr Cullen said that there were tensions within the Treasury paper which seemed to be inviting the government to make large reductions to the top personal tax rates while also reducing the size of future budgets and maintaining a stable debt to GDP ratio.
"This would seem to imply that I simultaneously loosen and tighten fiscal policy while also broadly maintaining current fiscal settings.
"As Treasury itself observes, the ageing population will put pressure on the fiscal position and strong fiscal positions can deteriorate quickly. That is why the manifesto Labour took into the election campaign was the most fiscally responsible of any party and why we will continue to run a prudent and consistent fiscal strategy.
"The government will not be undermining the platform of fiscal stability and strength that we have built up over the past six years. The mission this government has set itself, as spelt out in the Speech from the Throne last week, is to lift the quality of life and standard of living of all New Zealanders.
"To achieve that we need to lift labour productivity, improve the skills base of the workforce, protect environmental values and raise sufficient tax to support quality public health and education services and to provide security in retirement," Dr Cullen said.
The Treasury briefing paper is available at:
Contact: Patricia Herbert, press secretary, 04 471 9412 or 021 270 9013