P.M. outlines possible Budget tax reforms

Press, 15 July 1982, Page 2

P.M. outlines possible Budget tax reforms

PA Wellington Changes would be made in the Budget to concessions and incentives after a full examination of them by the Government, said the Prime Minister (Mr Muldoon) yesterday. . )

Mr Muldoon told a Wellington meeting of accountants: "We have beenjexamining all these concessions and incentives in the context of the tax reform exercise, and there will be some changes.” , . '

He -also said that it would be impossible to make a "one-bite move .in the field of tax reform” in the Budget, which he said'was likely to be presented on either July 29 or August 5.’ “This year's Budget will move towards that goal but; leave further moves |o bei made on subsequent -occasions.”

Referring to incentives, Mr Muldoon said various types had been introduced over the years to move the .economy in other worth-while directions.

“Some have been effective,

many have been ineffective in that they have been quickly forgotten, even by professional practitioners, while others have aroused the wrath of those who see them as excessive concessions to a favoured few,” he said.

New Zealand had given commitments, both in closer economic relations with Australia and in negotiations with the United States, on export incentives. “We have also given certain commitments to our own people that various incentives will continue until certain stated, dates,” Mr Muldoon said. “It has been necessary to marry all of these commitments in order to deal with this whole question of incentives and concessions.” Mr Muldoon said that it could be that moves on the taxation of life offices, building societies, and superannuation funds might have to be postponed for a later Budget.

The Goverment’s taxation task force, the McCaw committee, “did not have time to

deal with the complex and difficult question ... and a caucus committee sat on those matters and reported to me some weeks ago,” Mr Muldoon said.

The implementation of the recommendations in that report was "also very difficult.”

No final decision had been made, Mr Muldoon said, but “it may well be that a further study is needed." No firm decisions had yet been made on the whole field of company and dividend taxation, he said, “but obviously there will be in the very near future.”

Mr Muldoon also said that he believed unemployment in New Zealand "bottomed out about this time last year."

“Our main problem now is matching our available skills with the demand for skilled and semi-skilled labour. Comprehensive training programmes are under way but it is likely that we will need to import some skills.” Commenting on the pricewage freeze, he said, “It seemed to me that if in New

Zealand we could stop the clock for 12 months, that would inevitably achieve major worth-while results in its impact on the New Zealand economy, and indeed the-welfare of our people.” “France, with a’ Socialist Government, has implemented a freeze, but given a small wage increase first, which has to be absorbed by employers. We are giving the extra income as a tax reduction.” Mr Muldoon said that it had been said the Government knew what the second quarter consumers price index figure — later revealed at 5 per cent — would be at the time the price freeze was implemented. “That is not true," Mr Muldoon said. “But having been very close to the New Zealand economy since as long ago as 1964, it was obvious to me before I saw any figures that it was going to be high, and that claims such as those announced by the drivers would lead to a wage round that was entirely unacceptable,” he said.