The fate of a mooted multimillion-dollar technology park in Queenstown with up to 700 IT jobs — and potentially “thousands” more across New Zealand — hang in the balance after last month’s budget.
New Zealand-born US businessman Jason Neal says he is still pressing ahead with his plans for his former home town, but believes New Zealand’s “non-competitive” tax policy is hindering his efforts.
Neal, who runs software company GHS Global in San Francisco, wrote to Finance Minister Michael Cullen proposing an interim 15% corporate tax rate for new businesses to last between three and five years. He awaits a reply and is “disappointed” the idea was not taken up. At present, he says, New Zealand’s tax rate is “too high to compete with other countries”. Singapore and Ireland, for example, have rates as low as 10%, while Australia has just reduced its corporate tax rate to 30%.
Neal says he proposed measures that would ensure firms kept their investment in New Zealand once the interim period expired. “It’s sort of taking what Ireland has done … it would attract investment into New Zealand,” he says.
He is critical of the $100 million Venture Capital Fund announced in the Budget, saying on the one hand it is a risky use of taxpayer dollars, but also that it is too small a sum. It focuses on the R&D phase rather than bringing new products to market, he says, and firms are wary of any government involvement.
“There’s no incentive for the larger investors here. Overall I just think New Zealand is not doing enough to help itself,” he says.
Neal’s call for lower company taxes is backed by ITANZ chief executive Jim O’Neill and other business leaders.
“We must be wary of the gulf that exists in the corporate tax world between Australia and New Zealand,” O’Neill says. “We are still somewhat anxious that we are not using the tax system to our advantage and to direct business investment to New Zealand,” O’Neill says.
“In promoting local and foreign investment, nothing in the budget addresses this,” says Employers and Manufacturers Association CEO Alasdair Thompson.