Neal Barclay of Meridian Energy. Photo / Supplied
Chief executives are against the Government raising additional tax revenue through either a further expansion of the tax base or an increase in current tax rates. That's opposed to looking to grow the economy and grow tax revenue accordingly.
An overwhelming majority — some 91 per cent of respondents to the Herald's Mood of the Boardroom survey — said this would not be appropriate. Just 5 per cent were in favour, 4 per cent were unsure.
Several executives responded saying the government should be focused squarely on the growth of the economy, rather than lowering the net income of Kiwis.
"The fastest and most effective way to grow Government revenue is to grow the economy," said Beca CEO Greg Lowe. "We need to work together to make the pie bigger, not focus on slicing the same pie up differently.
"Tax settings in New Zealand since the David Lange and Roger Douglas reforms have been, and still are, relatively balanced and fair."
"Another dumping on the drivers of business and economic growth?" questioned an education provider. "Address the haemorrhaging of funding into social housing and unemployment first, before businesses and taxpayers are hit again!"
Not everyone is singing in the same key.
Meridian Energy's Neal Barclay is among a group of survey respondents that say capital gains tax should still be on the table: "Capital gains tax should still be on the agenda — not as a way to increase the tax take, but more to distribute the tax more fairly," he said.
From another director: "The lack of a capital gains tax has us out of step with most economies — certainly the ones I work in and creates significant tax leakage in the New Zealand system. Surely this must be solved at some point?"
"New Zealanders expect the standards of a Scandinavian country, but not the taxes to pay for it," says an investor. "This is hindering our overall performance and outcomes."
But while some 50 per cent of survey respondents felt the Government should reduce taxes — in any form — to stimulate economic activity, 41 per cent were against.
Barfoot & Thompson's Peter Thompson suggested incentivising small to medium businesses to grow with a preferential tax rate rather than penalising them.
The EMA's Brett O'Riley also favoured a reduction "We need to be encouraging businesses to invest in the plant, capacity and skills at a time when costs are rapidly rising, impacting profitability."
The NZ Initiative's Roger Partridge cautioned tax reductions should not be used to stimulate economic activity when the economy was overheating. But he said tax relief may be appropriate for businesses adversely affected by lockdown.
Others suggested any rethink on tax reduction should wait until New Zealand passes the pandemic phase.
"Doing so would need to be part of a comprehensive rebalancing of the tax system as part of a broader post-Covid fiscal strategy," said Spark's Jolie Hodson.
In April, a new top tax rate of 39 per cent on individual incomes earned above $180,000 was introduced along with a raft of other tax changes.
The Government estimated that the change would impact just 2 per cent of earners, and deliver a further $550 million in the coming financial year.
The threshold matches Australia's of A$180,000, although the top personal income tax rate across the Tasman is higher at 45c for every dollar.
The majority of New Zealand's top CEOs — some 64 per cent — say the introduction of this tax rate was not warranted given the future economic projections of a return to Budget surplus by 2025/26.
Another 30 per cent say it is acceptable, and 6 per cent are unsure.
A media executive agreed the tax hike was necessary saying it would "take many years of surpluses to repay the expanded Government debt due to funding the response to the Covid pandemic".
"On an international scale the 39 per cent tax rate is not out of line," added Datacom chair Tony Carter.
"And remember we have an imputation credit regime which means there isn't double taxation which is common in many other countries."
Others who commented were dismissive.
An agribusiness boss said:" I believe it is purely a politically motivated tax — raised $500m? In the scheme of things how about the team of 5 million all pay 1 per cent more at whatever their rate and be all in this together?"
Others said the revenue gathering impact was relatively immaterial "It was driven by a political agenda, and as such I expect it is here to stay," added a banking chief.
Federated Farmers CEO Terry Copeland slammed the move as "simply virtue signalling and making very real difference."
Others pointed out the increased tax rate opened the way for tax avoidance.
Fletcher Construction CEO Peter Reidy noted the tax was directed only at PAYE individuals and is not addressing all income levels over $180,000.
The majority of high-net-worth individuals that this tax rate supposedly targets are not paying those taxes in the first place, added a food executive.
"Salary earners have been disadvantaged."
"Makes it worthwhile hiring an accountant to avoid" — agri boss.
A high-profile director concluded while the the revenue gathering impact is relatively immaterial. The policy was driven by a political agenda, " and as such I expect it is here to stay".
That said, three-quarters of survey respondents agreed that the 39 per cent top tax rate on personal incomes raises equity issues with other tax rates — specifically the trustee tax rate set at 33 per cent and the company rate at 28 per cent.
Some 18 per cent said it doesn't; 6 per cent were unsure.
From a banker: "It certainly mucks up the tax system by strongly incentivising people to channel income into corporate structures."
Others suggested the Government should just close the gap by for instance lifting the tax rate on trustee income to remove an obvious avoidance loophole.
Asked directly if the 39 per cent tax rate on personal incomes further skews the taxation of labour (people) over capital, 68 per cent of respondents agreed it did in a net negative way for New Zealand, 6 per cent felt it did in a net positive way and 26 per cent were unsure.
Many business leaders rate the Opposition Finance Spokesperson highly.