By DANIEL RIORDAN
Barely 24 hours after its Budget disappointed business, the Government was holding out an olive branch in at least one area.
Hints were made yesterday by both Prime Minister Helen Clark and Finance Minister Michael Cullen that they may revisit their decision to help small businesses finance their research and development with grants instead of tax breaks.
Helen Clark told an Auckland business audience that the Government had decided on grants for two reasons: to help small businesses that are not yet making profits, and because tax breaks would have bad implications for the revenue base without necessarily adding benefit to the economy.
But she also suggested that the door was not closed on the business community, which lobbied hard for the tax breaks first promised by the Labour Party before last year's election.
"The planned overall review of the tax system may look further at the issue," she said.
The timing of the tax review has yet to be decided - the Coalition partners are understood to be taking more time to agree on its scope.
About the same time as the Prime Minister was making her comments, Dr Cullen was telling a business audience in Wellington that although the grants scheme was the best alternative at the moment, the Government would be keeping a watching brief on the issue.
"We will keep the programme under review, both as to amount allocated and the method by which it is allocated," said Dr Cullen.
Clark and Cullen drop R&D tax hint
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