IT and other business leaders have rounded on the budget for failing to give New Zealand a “competitive” tax regime, which they say will hinder its efforts to develop ‘new economy’ businesses.
Corporation tax was left unchanged at 33%, but earlier this week the Australian government’s budget confirmed its well-signalled move of lowering corporation tax to 30%.
While programmes were announced to boost R&D spending, nothing else was added to recently announced R&D tax incentives, despite pleas for more from business.
ITANZ chief executive Jim O’Neill says the IT industry was realistic in not expecting “any presents” in the budget.
“We must be wary of the gulf that exists in the corporate tax world between Australia and New Zealand. We are still somewhat anxious that we are not using the tax system to our advantage and to direct business investment to New Zealand,” he says.
Auckland Chamber of Commerce CEO Michael Barnett says corporation tax in Ireland is just 10% and New Zealand will be disadvantaged in attracting skilled labour.
“In promoting local and foreign investment, nothing in the budget addresses this,” says Alasdair Thompson, chief executive of the Employers and Manufacturers association.
“There was no announcement about bettering Australia’s company tax rate of 30%. There’s no sense of urgency to retain investment in New Zealand, and this omission sits strangely at odds with the rhetoric elsewhere in support of enterprise development,” he says.
“And while double taxation of dividends persists between Australia and New Zealand, New Zealand will always be the loser,” Thompson says.
Simon Carslow, chief executive of Business New Zealand, says Australia has “stolen a march” on New Zealand by reducing its business tax rates and while other countries were cutting their taxes, "we seem to be heading in the wrong direction.”