Export allowances doubled

Press, 10 November 1980, Page 15

Export allowances doubled

PA Wellington : Export incentive allow- ' ances more than doubled 1 from 56.823.000 in 1976-77 to 514.136.000 in 1977-78. J according to figures issued I yesterday bv the Govern- 1 ment Statistician (Dr J. H. Darwin). Manufactured exports 1 enjoved most of this — 56,277.000 in 1976-77 and $13,688,000 in 1977-78. He also said the number of companies decreased by [2Bl from 80,712 in 1976-771 ito 80,431 in 1977-78. Their j assessable income also decreased from $1,233.4 million i in 1976-77 to $1,036.7 mil-j ilion in 1977-78. I The allowances referred to 'are export market devel- 1 opment, increased export of goods, increased exports to mew markets, and export in-, vestment, the last available: .only to companies that have i already achieved an ’export’performance in goods 1 !qualifying for the increased' (taxation incentive for which I they are planning productionfor export. i The allowance was first; introduced in the 1976-. 77 income year. | The tax laws provide for' existing increased exportsincentives to be converted tO| ja refundable tax credit ati i the rate of 45 cents in the I dollar where the exporter, -because of inadequate asses-; sable income or losses, is. unable to receive the fulL tax saving benefit arising; from the incenti incentives. ! The tax credit was paid as; a normal tax refund in re-i spect of the 1977-78 income I

year. The refund is restrict-, ed to increased exports in- 1 centive allowances or deduc-| tions. such as export market : development expenditure andj iinvestment allowances. , ' The net business loss does not fully reflect the effect of the allowances qualfiying for a tax credit for those companies which received a tax credit, said Dr Darwin. > The total amount of tax credits paid out by the Inland Revenue Department tol March 31, 1979 was $39.9 million. Most of this related! to the 1977-78 income year, t Export incentive allowances were creating more ' problems than they were intended to correct and should be scrubbed, said Social Credit’s finance and economic affairs spokesman, .Mr Les Hunter, yesterday. i “Letting companies- off ' paying $221.08 million in tax in the 1977-78 year because' of export allowances discriminates against others' who contribute to the export, i drive but who must pay! I more in tax to make up the (Government’s loss of comipany revenue,” he said. I Farmers were disi criminated against the most. /The share that companies (l paid of total tax halved between 1966 and 1977 and! had fallen at a greater rate ’.since then. ! “A relative fall in com(pany profitability was the I major reason, but the effects lof export allowances have been very significant.” said .Mr - Hunter. “With the j United States ruling against

export incentives applying within New Zealand, the entire system has become internationally suspect." He said export incentives allowed had been little more than compensation for increased interest charges which companies have had to pay. Export tax allowances for companies had meant all other taxpayers had in effect

s', bsidised increased moneylending profits stripped away from companies in-the export business. Mr Hunter said Social Credit favoured scrapping the present export incentive system based on taxation and compensating for this with a realistic payment in New < Zealand dollars for overseas exchange earned, j