4. GORDON COPELAND (United Future) Link to this
to the Minister of Revenue
What are the potential revenue implications of the business tax review?
Hon PETER DUNNE (Minister of Revenue) Link to this
If all the measures that the Inland Revenue Department and Treasury have been able to cost were advanced, the costs could be up to $1.7 billion per annum, of which $540 million would be the cost of the company tax rate reduction to 30 percent. The adoption of uncosted items that were contained in the package would further increase the cost to around the $2 billion figure that I released yesterday.
Why is a business tax review happening now, when the Minister of Finance stated before the last election that any reduction in the company tax rate would be a low priority during this parliamentary term?
The major reason for the business tax review having been undertaken, and for the ongoing work around it, was that it was a high priority in the confidence and supply agreement between the Labour-led Government and United Future.
Craig FossWas the Minister reported correctly in the Trans Tasman of February 2006 where, regarding tax reform, he stated: “There is little point in seeking quick-fix answers or in fiddling around just lowering the corporate tax rate from 33 cents to 30 cents to match the Australian rate” and that he is “thinking in terms of much deeper cuts”; if the report is correct, what has changed between the bold February report and the fiddling around of the business tax review?
I remind the member that the changes foreshadowed yesterday in their totality amount to the biggest review of business tax arrangements in this country since 1988. I regard that as bold.
As the report yesterday indicated, any move to lower the company tax rate has an obvious implication for personal tax rates. But as the report also indicated, this is a review of business tax arrangements. Those implications will be considered at the time that decisions are made about the nature of any changes to business taxes.
The document is currently the subject of public consultation and is available for submission until 8 September. In that context, I note that I wrote to Dr Brash and Mr Key before December last year to invite their participation in the review, and am still awaiting a reply. Those people who wish to make submissions can do so by either going to policy.webmaster@ird.govt.nz and marking their submission “business tax review” or writing to the deputy commissioner, policy advice division, Inland Revenue Department, PO Box 2198, Wellington, with their submissions. Decisions will then be made, probably early next year, once we know the revenue track and the forward forecasts on the matters contained in the document yesterday and any associated issues.