25 September 2006
Chamber of Commerce Business taxation review Submission
Earlier this month the Combined New Zealand Chambers of Commerce made a submission to the Business taxation Review. This follows on from a visit by Peter Dunne to the Northland Chamber of Commerce in August.
In brief the New Zealand Chambers of Commerce and Industry stand for a low-rate, broad-based
tax policy.
We support a lower, flatter income tax structure including a reduction in the
rate of company tax (and related rates of tax) and a narrower differential between
personal and company tax rates.
The Chamber of Commerce believes that this would improve New Zealand’s international Competitiveness and boost investment, employment, productivity and economic growth. The Governments discussion document proposed a reduction in the Company tax rate by 3 cents in the dollar. The Chambers support this reduction however a reduction in the company rate of 3 cents in the dollar is not enough if we are to fully transform New Zealand’s economy or achieve the kind of productivity growth that both business and the Government seek.
It is likely that Australia and other countries will continue to lower their company and personal tax rates over the next few years and we believe that the New Zealand company tax rate needs to be lower than 30% if we are to maintain international competitiveness.
It is not possible to review business tax without considering personal taxes and their relationship with the company tax rate. Around 40% of businesses are unincorporated –for example as sole traders or partnerships – and so would not benefit directly from reductions in the company tax rate.
Cutting the headline company tax rate from 33% to 30% would widen the differential between it and the top rate of personal tax. Closer alignment of company and personal tax rates is necessary to reduce tax planning.
The other item in the Governments discussion document covered by Peter Dunne when he was in Northland is the proposal to re-introduce tax incentives. The Northland Chamber argued that tax incentives do more harm than good through the distortions they create. They erode the tax base and result in increased compliance and administrative costs.
The tax incentives in place in New Zealand prior to 1984 did not work well. In all likelihood, many of the pre-1984 problems would reoccur under the options outlined by Peter Dunne and so these “tax base initiatives” should be avoided and the low-rate, broad-based tax principle should be retained.
There is little support amongst businesses for tax base initiatives. A recent Wellington Chamber of Commerce survey of businesses in the Wellington region found that 72% of respondents would prefer that the Government reduce the company tax rate compared with 22% who would prefer targeted incentives for research and development or exporting.
A Copy of the full submission can be found on the Northland Chamber of Commerce website www.northchamber.co.nz
The Northland Chamber of Commerce would also like to take this opportunity to thank all those sponsors, entrants and Judges involved in our recent business awards. We congratulate Lodge Bordeaux for wining the supreme awards and also Darryl’s Dinner Cruises the winner of the Northland Chamber of Commerce Excellence in tourism award.
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 21,000 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
You can have a say on this by going to the Northland Chamber of Commerce Feedback website on www.northchamber.blogspot.com
Earlier this month the Combined New Zealand Chambers of Commerce made a submission to the Business taxation Review. This follows on from a visit by Peter Dunne to the Northland Chamber of Commerce in August.
In brief the New Zealand Chambers of Commerce and Industry stand for a low-rate, broad-based
tax policy.
We support a lower, flatter income tax structure including a reduction in the
rate of company tax (and related rates of tax) and a narrower differential between
personal and company tax rates.
The Chamber of Commerce believes that this would improve New Zealand’s international Competitiveness and boost investment, employment, productivity and economic growth. The Governments discussion document proposed a reduction in the Company tax rate by 3 cents in the dollar. The Chambers support this reduction however a reduction in the company rate of 3 cents in the dollar is not enough if we are to fully transform New Zealand’s economy or achieve the kind of productivity growth that both business and the Government seek.
It is likely that Australia and other countries will continue to lower their company and personal tax rates over the next few years and we believe that the New Zealand company tax rate needs to be lower than 30% if we are to maintain international competitiveness.
It is not possible to review business tax without considering personal taxes and their relationship with the company tax rate. Around 40% of businesses are unincorporated –for example as sole traders or partnerships – and so would not benefit directly from reductions in the company tax rate.
Cutting the headline company tax rate from 33% to 30% would widen the differential between it and the top rate of personal tax. Closer alignment of company and personal tax rates is necessary to reduce tax planning.
The other item in the Governments discussion document covered by Peter Dunne when he was in Northland is the proposal to re-introduce tax incentives. The Northland Chamber argued that tax incentives do more harm than good through the distortions they create. They erode the tax base and result in increased compliance and administrative costs.
The tax incentives in place in New Zealand prior to 1984 did not work well. In all likelihood, many of the pre-1984 problems would reoccur under the options outlined by Peter Dunne and so these “tax base initiatives” should be avoided and the low-rate, broad-based tax principle should be retained.
There is little support amongst businesses for tax base initiatives. A recent Wellington Chamber of Commerce survey of businesses in the Wellington region found that 72% of respondents would prefer that the Government reduce the company tax rate compared with 22% who would prefer targeted incentives for research and development or exporting.
A Copy of the full submission can be found on the Northland Chamber of Commerce website www.northchamber.co.nz
The Northland Chamber of Commerce would also like to take this opportunity to thank all those sponsors, entrants and Judges involved in our recent business awards. We congratulate Lodge Bordeaux for wining the supreme awards and also Darryl’s Dinner Cruises the winner of the Northland Chamber of Commerce Excellence in tourism award.
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 21,000 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
You can have a say on this by going to the Northland Chamber of Commerce Feedback website on www.northchamber.blogspot.com
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