Finance Minister Michael Cullen is talking up a cut to the business tax rate, saying today it would make New Zealand more competitive with Australia.
Cutting the rate from 33 per cent to 30 per cent in 2008 to match Australia's is one of the options in a discussion document, released this week, about a review of the business tax regime.
Dr Cullen's support appears to make it a virtual certainty, and it is expected to lead to a change in the personal tax thresholds.
In a speech to the Trans-Tasman Business Circle in Auckland today, Dr Cullen said aligning New Zealand with Australia would encourage investment and boost productivity.
"We are proposing to match Australia's corporate rate without burdening business with all the other onerous taxes Australians suffer -- namely a capital gains tax, stamp duties, payroll taxes and compulsory superannuation," he said.
"So, if adopted, that move alone must make us more competitive with Australia."
Dr Cullen said New Zealand needed to respond to changes in the Australian tax system more than Australia needed to respond to New Zealand's.
"As with many issues in CER (Closer Economic Relationship) we are a kiwi sharing a nest with an emu."
Dr Cullen said Australia was one of New Zealand's sources for high-skilled labour.
"The much vaunted 'brain drain' is in fact a 'brawn drain'," he said.
"As the statistics indicate, we are at the moment net importers of highly skilled workers from Australia and elsewhere, and net exporters of low to mid-level skills."
- NZPA
Cullen talks up business tax cut to match Australia
Michael Cullen
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