Business seeks big tax cut to aid growth

A big cut in company tax is one of the measures the business sector is asking for in a wide-ranging set of economic growth proposals sent to Government ministers.

Business New Zealand chief executive Phil O'Reilly said yesterday that the organisation was putting forward "a list of actions which would make up a useful first step towards growth".

The actions were likely to gain majority support in Parliament.

It wants the tax burden lowered through caps on Government spending, and a commitment to reducing company tax to 30 per cent in the short term and 20 per cent "over time".

Company tax is at present 33 per cent, and Business NZ said lowering it would provide significant relief.

It would also allow debt to be repaid earlier than was now possible and for greater investment in plant and human resources.

It identified the most important concerns over the next few years as lower productivity than major trading partners, international trade barriers, skills shortages and infrastructure constraints.

It said net immigration had "effectively dried up", there were persistent shortages of skilled and unskilled labour, further interest rate rises to curb inflation would hurt exporters and productivity generally, and current account deficits at present levels were not sustainable.

"If inflationary expectations become entrenched, there is a risk of stagflation - low growth and persistent inflation," Business NZ told ministers.

"In this environment a policy response is required to help businesses remain internationally competitive and provide the growth to maintain good employment levels and living standards."

Business NZ represents 60 national industry associations, with a combined membership of 76,000 private- sector employers.

What business wants

Among Business New Zealand's 'desired outcomes' from the Government over the next three years are:


* A business-friendly environment with a commitment to reducing compliance costs.
* Restrictions on central or local government enterprises competing with private enterprise.
* Policies to reduce carbon emissions in place of carbon taxes.
* Changes to the Resource Management Act so trivial claimants cannot stop legitimate development.
* Changes to the Holidays Act, ACC legislation and labour laws which give unions monopoly over collective bargaining.
* All petrol tax revenue committed to roading, with higher priority given to building roads.
* Enough immigrants with skills and good English to meet needs.
* More money spent on industry training.

- NZPA