Debates on taxation draw differing views

Export tax incentives are shaping up as the new battleground in the taxation debate, nearly two decades after they were axed because of their economic distortionary effects.

"It's a return to the bad old days of cosying up to Government to get tax rorts," a transport sector CEO said.

But CEOs rated its relevance at 2.9/5 on a taxation survey prepared by Deloitte. The Government included further export market development activities as an option in the Business Taxation Review. But so far it has failed to provide any costings.

Business Roundtable chair Rob McLeod points out that a return to tax concessions (as the OECD has advised the Government ) would signal that the "no exception" policy of the past 15 years is being loosened - "thus encouraging lobbying for more significant relaxation measures in the future."

Auckland District Hospital chairman Wayne Brown - who has a range of private businesses - is scathing. "Tax consultants on $300 an hour aren't going to go out and develop export markets. If the only lever the Government has to get people into exporting is tax, then it should give it to exporters."

He talks of difficulties of competing offshore against bigger companies which are armed with tax breaks from their governments.

Others, such as Carter Holt Harvey chairman John Maasland, caution that there should not be a wholesale return to the tax breaks of old, but say there is "no harm" in exploring some of the options put forward by the NZ Institute to boost NZ's international profile.

The review's sponsors - Finance Minister Michael Cullen and Revenue Minister Peter Dunne - have underscored a cautious approach. They say the Government considers tax concessions to be a more effective way of supporting the development of export markets than discretionary assistance alone.