Why not copy Ireland on tax, asks Key

John Key

National finance spokesman John Key wants New Zealand to adopt the low-tax model that Ireland used to transform itself into the "Celtic Tiger" - if possible.

Mr Key said if he became finance minister after the election he would launch a study to see whether the Irish model could be adapted here.

"First-hand experience tells me it's a real winner," he said.

Mr Key, the former head of investment giant Merrill Lynch's global foreign exchange operations, shifted a swag of business to Ireland in the 1990s to take advantage of the 10 per cent preferential tax rate which then applied for foreign investors in financial services. Ireland has since set the company tax rate at 12.5 per cent for all firms after a decade-long economic boom.

Its annual exports are $160 billion, against $30 billion for New Zealand.

Mr Key made it clear that the Irish model - or some variant - would not be policy from day one.

But unless New Zealand introduced a more competitive company tax regime, the outflow of skilled and entrepreneurial people would increase.

National has already unveiled plans to cut the company tax rate from 33 to 30 per cent, to match Australia's corporate rate.

But Mr Key signalled that a National government would inevitably have to cut the rate below 30 per cent over time.

"We're still going to be above the OECD average - which is now 29 cents and going lower."

National is not expected to detail its tax-cuts plan until the Treasury issues the pre-election economic and fiscal update.