Tax cuts catch the mood precisely

Most senior executives want business and personal taxes cut and some want the company tax to drop to 25 per cent, a survey shows.

The Mood of the Boardroom survey found that 98.9 per cent of chief executives thought taxes should be reduced; 63.2 per cent thought personal tax cuts should be the priority while more than half of those who wanted a company tax cut wanted to see it drop to 25c in the dollar or less.

But more than half of the respondents don't think the National Party's company tax cut plan goes far enough. National's policy is to cut the company tax rate to 30 per cent to match Australia's in April 2008 or earlier if "fiscal circumstances permit". However, 60 per cent of those surveyed wanted the rate dropped to 25c in the dollar or less.

In a report on tax last week, Business New Zealand said company tax rates should be slashed to 20 per cent over time and 30 per cent immediately in order to boost investment which, in turn, would make businesses more productive and competitive.

Labour is the only big party not offering tax cuts for business - even the Greens and the Progressives favour a reduction.

But while they may have been hoping for bigger tax cuts from National, chief executives are nevertheless clearly favouring John Key as the next finance minister over Labour's Michael Cullen. Just 11 per cent named Cullen as their preferred finance minister.

Nearly 86 per cent said they were concerned that Cullen had executed an about-turn on spending leading up to the election by loosening Government purse strings to wipe student loan interest payments and extend the Working for Families programme. More than 80 per cent wanted to see overall Government spending cut.

However, there was strong support for Cullen's plan to index personal tax rate thresholds against inflation to alleviate bracket creep or fiscal drag. Cullen announced the plan in the June Budget but it will not come into effect until 2008 and the thresholds will only be adjusted every three years - not frequently enough for most Mood of the Boardroom respondents.