LABOUR'S TAX HIKE "ANOTHER MASSIVE STEP BACKWARDS"Enterprise and Commerce
Labour's tax proposals will mean higher taxes for companies, Commerce and Enterprise Minster Max Bradford said today.
"It's impossible to run a dual tax system for individuals and companies," Mr Bradford said in response to Labour's plans to introduce a 39 cent tax scale on incomes over $60,000.
"The last Labour Government knew that it's impossible to run a dual tax system. There is too strong an incentive for individuals to avoid tax by setting themselves up as a company in order to benefit from a lower tax rate.
"On the other hand, raising our company tax rate to 39 per cent will mean it is higher than Australia's, thus creating a huge disincentive for investment in New Zealand. It will guarantee that many New Zealand companies will move to Australia.
"The Labour Party has posed a real conundrum with its intention to raise taxes. If it does raise the company tax rate to 39 per cent (compared with what may be 30 per cent in Australia), New Zealanders will lose thousands of jobs to Australians.
"If they don't, they will be opening wonderful opportunities for wholesale tax evasion by higher earning taxpayers and thus collect very little of the additional tax revenues they are expecting."
(Note: The current company tax rate in Australia is 36 cents in the dollar, but the proposed tax reform package includes the prospect of it falling to 30 cents in the dollar.)
"This Labour proposal is yet another massive step backwards for New Zealand, and is an extraordinarily stupid measure for a political party claiming to know how to manage the New Zealand economy," Mr Bradford said.