No Tax Cuts on the Horizon
March 20, 2012 New Zealand Taxation
New Zealand will not see cuts to personal income taxes, corporate income taxes or GST in the near future, according to the secretary of the New Zealand Treasury.
While delivering a speech at a conference of the International Fiscal Association in Queenstown on March 17th, the secretary of the Treasury of New Zealand Gabriel Makhlouf described the current state of the national tax system and also discussed potential changes which could be implemented in the future.
The Secretary suggested that, ideally, New Zealand should align the top tax rates for personal incomes and corporate incomes. He said that the current 5 percent difference in the rates is acceptable, but the gap should not be allowed to widen any further.
Gabriel Makhlouf also noted that the rate of corporate taxes in New Zealand was marginally higher than the average in other developed countries around the world, and the government should consider the feasibility of reducing the tax obligations for companies. However, he conceded that a reduction in corporate tax rates will directly affect the government’s ability to reach its goal of a budgetary surplus by 2014.
He suggested that extra government revenues could be raised by scrapping currently offered tax breaks, such as those available to large scale mining production operations.
In his speech the Treasurer commended the national goods and service tax system, saying that it was the “…best value added tax in the world”. He added that the government should resist any calls to introduce exemptions to the GST, saying that excluding certain foods and items from GST would only serve to undermine the tax.
Photo by bradjward