Budget: Not Enough To Catch The Aussies
June 4th, 2010
The verdict on this year’s budget from business leaders is the Govt must do more to keep NZ competitive internationally. While the decision to drop corporate tax to 28% has been hailed, business leaders say a lower company tax rate is only part of the picture for companies deciding to invest. Business NZ CEO Phil O’Reilly says while the Budget was “very good,” the Govt also needs to look at regulatory responsibility, the right capital market rules, a better Resource Management Act system and Emissions Trading.
But BNZ Chief Economist Tony Alexander says lower company tax is not a “biggie” in the scheme of things because Aust tax rates would also come down in time. He points out some of the benefit of lower company tax will be offset by changes on depreciation rules for new plant and equipment for business. The current 20% depreciation loading on new plant and equipment has now ended. While the Govt had sold the Budget as part of its plan to create a “step change” in NZ’s growth prospects, Alexander pours cold water on this. He says the changes announced by Finance Minister Bill English won’t radically alter NZ’s economic prospects, but it is heading in the right direction.
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