Business Tax Review - Bold move or more intervention?

Should the Northland Chamber of Commerce advocate bigger reductions in both company and personal tax rates to central Government?
	Yes
	No
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Earlier this year the Northland Chamber of Commerce and other business associations provided a proposal to the Government on what they would like to see come out of the review of business taxation.

The joint proposal was based on the view that the main outcome of the review should be a reduction in the rate of company tax and a narrower gap between the top personal and company tax rates. The Proposal called for company tax rate of 25 percent and the present top and upper middle personal tax rates to be reduced to 28 percent.

The Chamber had a reduction in the tax rates in two steps by 2009/10.

The main criteria adopted by the Chamber in developing a proposal were to reform business taxation in a way that would benefit New Zealand’s Economic Growth and make New Zealand Tax structure internationally attractive especially in line with Australia.

In the lead up to the 2005 General Election the Government has said it planned ‘bold’ moves on business taxation. Our proposal was consistent with that commitment.

The Government, as part of its economic transformation package, has put together a number of initiatives for business to choose from; The Menu includes
Reducing the company tax rate from 33% to 30% (The Chamber proposal recommended that an immediate step be a reduction in the company rate to 30%)
Targeted tax credits for: - R&D activities - export market development activities, and - skills improvement;
Depreciation rate changes
Compliance cost reduction measures.

Peter Dunne from the United Party will be in Whangarei the 10th August 2006. Peter Dunne, in his confidence of supply deal with labour is the Minister of Revenue.

This means that he is solely responsible for all revenue areas and shares responsibility for tax policy with Dr Cullen.

This is a timely opportunity to talk to the minister as he will be able to answer questions regarding the latest ‘menu of options’ for Northland Businesses. We encourage Northland Business to come along ask questions and voice your opinion.

The questions we will be asking include

1. Is a 3% reduction in Company Tax rate a bold move?
2. What about personal tax rates (40% businesses are not incorporated)?
3. Targeted tax credits result from / encourage more Government Intervention - is there any way of getting Government out of the way?
4. How do these items add to United Future’s stated commitment to a low and comparatively flat tax structure?

We look forward to seeing Minister Dunne at the Whangarei District Library Conference room at 2pm on the 10th August 2006.

The Northland Chamber of Commerce is the networking, education, advocacy and marketing group for Northland business, and is part of a nationwide network of 30 and a world-wide movement of 27,000 chambers. Subscription to the free fortnightly chamber e-news can be arranged on info@northchamber.co.nz. Enquiries to 09-4384771 or www.northchamber.co.nz, www.kaiparachamber.co.nz and www.farnorthchamber.co.nz

Relentless pursuit of fines

Do you think that Government should intervene and ask the courts to relentlessly pursue fine dodgers?
	yes
	no
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I’ll admit I am one of those people who upon getting a speeding fine – file it until way past the due date knowing that there will be another reminder in the mail. Once I receive that I put it right to the bottom of the to-dos in the eternal hope that the police will somehow magically lose my fine or forget to follow up. Then I receive a further notice for my original fine plus court costs. Once I receive this I generally mope over to the court house and pay the thing. Cursing as I fork over a perfectly good 60, 80 or 100 dollars that I can always find 1001 other uses for. Why do I eventually pay the fine? Well forget about philanthropic reasons or a ‘I’ve been a naughty boy and now I must pay my dues’ attitude - At the end of the day I know that If I don’t cough up am going to face further consequences i.e. Further court costs, cars impounded, named in the paper, bailiffs and eventually arrest next time I’m pulled over.

.Recently I have been astounded to read about huge fine write offs. Politicians in the usual ‘duck and dive’ statement said that ‘these fine write-offs ‘only happen through the courts by Judges with the authority to do so. What also irks with these fines remits are the reparation orders due to the victims of crime are also being written off.

The Board of the Northland Chamber of Commerce in the recently released Strategic Intent painted Northlands future as one where all citizens contribute economically – Stephen Gillingham’s leadership ensure that our members are aiming to create more than just an economic prosperous Northland, but includes other elements to ensure that everything we do today adds to a sustainable future for Northland. This includes being productive members of society and ensuring that we are all paying our way. A big part of this is of course taking responsibility for our actions.

As far as the fines remit problem is concerned it’s obvious from Minister Rick Barker’s comments that the Government don’t see the issue as being serious enough to deal with. We don’t agree with this logic. Fines and justice are an integral part of the make up of our community. We ask Rick Barker to ensure that every dollar of every fine is pursued relentlessly and that Government set policy and guidelines to ensure that this happens.

On Tuesday 8th August the Northland Chamber of Commerce will be hosting the Law and Order Spokesperson for the National Party, Simon Power. Simon is slowly gaining prominence among his constituency and this has been reflected in his rise through the National Party ranks.

Simons Visit will be timely with the recent announcement of the latest fines Remit. Northland Chamber of Commerce members will get an opportunity to ask Simon about this issue and how the opposition could handle topics like this.

For Chamber membership enquiries please contact the ofice on +64 9 4384771

ONTRACK is ONTRACK. Is Northland ONTRACK???

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Do you think that the proposed RailLink is important for th eNorthland Region?
	Yes
	No
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About 25 years ago someone thought it would make sense to have a rail link to connect the main trunk with Marsden. In the last 25 years a vast amount of engineering, economic, social and environmental reports and studies have been carried out. None of these reports have found any adverse economic, social or environmental reasons for not going ahead with a link out to Marsden.

The Marsden Link project appears to have support from all three local councils, regional Government, business, residents and even Central Government. The land required for this infrastructure has been identified. WHAT’S THE PROBLEM!? . ONTRACK is the latest reincarnation of the NZ Railways Corporation which looks after the rail corridor. The decision last week from ONTRACK was to not to proceed with the designation of this land.

Well, Mainland Cheese reckons good things take time - but 25 years? And we are not talking cheese here; we are talking about the economic and social well being of Northland! In our opinion this project would have to be one of the easiest and obvious economic development opportunities available to Northland.

All parties from politicians, business people, and community groups have told me that it is definitely going to happen one day, however, no-one can say when. We are sorry to be the bearer of obvious and bad news - it is not going to happen ‘one day’ unless we become extremely vocal to governmental power brokers in Wellington

The latest comments from our local and regional leaders expressed ‘disappointment’ about the latest ONTRACK decision and it was interesting to read that ‘ONTRACK has given…. And try to stay with us here ... ‘an assurance of continued interest and support for the project, and has pledged to continue to work on the establishment of an appropriate funding structure including the liability that would result from designation.’ We prefer not to be negative but that sounds like a carefully considered way of saying ‘we are satisfied to do nothing because no-one in Northland gives a toss … and we can put this on the back burner forever.’

Just because ONTRACK is a fairly new reincarnation of the NZ Railways Corporation, this is no reason for Northland to be going easy or giving concessions to them on this terribly important project. The NZ Government has a long institutional knowledge.

One of the hardest things in dealing with Government agencies is to convince them of lost opportunities when looking at development issues. The Northland Regional Council has quite rightly said that ‘ONTRACK needs to have vision to see the opportunities for creating synergies for development once a line is put in place.’

Once again, purely because of the nature of the beast, ONTRACK will not be able to see past the correct boxes they need to tick. In their minds, they have already ticked the right boxes by going through the latest exercise, communicated their findings (insert excuse here), and moved on to issues that they view as more pressing.

The Northland Chamber of Commerce has an Economic Development Mandate on behalf of its members. We are adamant that our community leaders and numerous members of parliament start becoming very vocal in Wellington to communicate in no uncertain terms that Northland wants this project back ONTRACK yesterday.

Make no mistake, In our opinion the fault for the latest delay is ours. ONTRACK have done their job but by remaining silent and reactive Northland has not demonstrated to Wellington our insistence that this project must go ahead! The Northland Chamber of Commerce is happy to volunteer to lead this and be involved in a very pro-active, rowdy, one eyed Northland way

Rating Differential

This week – What is a commercial rating differential? Why does the Northland Chamber care about rating differentials? Why did the Chamber ask the Whangarei District Council to abolish the rating differential over the next 10 years in the recent submission to the long term community plan?

Whether you are a residential or commercial ratepayer, part of your rates bill includes general rates. The General Rates are those funds that are collected and are applied to activities that provide benefit to the whole community. These generally cover services where it is too hard to tax direct users.

The Rating differential is the loading that business and commercial premises have imposed onto their general rates. In Whangarei for instance the Rating Differential is 5.

This means that commercial or industrial users pay five times as much per dollar of land value than residential ratepayers.

Generally Local Authorities will use two arguments in justifying the differential
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Firstly, commercial ratepayers can recover the GST on and deduct rates for income tax purposes but residential ratepayers cannot. The fallacy in this argument is that it doesn’t recognise that the business’s income is subject to tax whilst the imputed income of a residential household isn’t.

The second argument is that business and commercial ratepayers impose greater costs on infrastructure than residential properties. The cost of servicing commercial roading, parking and other utilities requires a higher standard of service. This argument misses the point that the commercial sector is used by everybody – for example the CBD is at least as much a benefit to the residents who go there to work, shop, eat and drink as it is to the businesses located there.

Why is it the organisations that are by their very nature creating wealth and employing people are hit the heaviest?

Remember that the majority of businesses in Northland (96%) are SMEs in other words employing less than 20 people.

Some areas have recognised the importance of the business sector. And in an effort to become business friendly, have abolished the commercial rating differential (eg. Kapiti).

Other areas have varying differentials based on the type of commercial zones eg. Wellington.

The Northland Chamber of Commerce advocates for the abolishment of the Commercial Differential and ask all distict and regional councils to consider a policy of abolishment over a 10 year period as a sign that we are a business friendly region.
Remember – to subscribe to the FREE fortnightly Chamber E-news letter, full of interesting Northland business news, send an email to info@northchamber.co.nz . For joining enquiries please phone the office on 09-4384771 or check our website at www.northchamber.co.nz, www.kaiparachamber.co.nz and www.farnorthchamber.co.nz