Business tax proposals released last week were aimed at increasing productivity and boosting New Zealand's international competitiveness, Revenue Minister Peter Dunne says.
The Government last week released a discussion document outlining tax reform proposals, with a reduction in company tax from 33 to 30 per cent top of the list.
In a prepared speech to PricewaterhouseCoopers today, Mr Dunne said boosting incomes was one of the most critical challenges facing the Government and the only way New Zealand could obtain sustained growth in wage rates was for labour to become more productive.
Greater labour productivity meant the same amount of labour would provide more gross domestic product.
Labour productivity could be increased by more investment in plant, equipment and buildings, or through a better educated workforce or more innovative technologies.
A critical issue for the Government was whether there were ways New Zealand's tax system impeded growth in labour productivity, Mr Dunne said.
Tax policy by itself could not build a high wage, high skill, knowledge based economy.
"But what it can do is remove tax obstacles to achieving that, and ensure that our business tax rules support innovation, business investment and the development of a highly skilled workforce and that they encourage exporters to break into new markets," Mr Dunne said.
He encouraged people to make submissions on the range of options in the discussion document.
It would not be possible to progress the full range of options "so informed tradeoffs will need to be made," he said.
Submissions close September 8.
- NZPA
