Company tax rates ‘for social policy’

Press, 9 October 1987, Page 4

Company tax rates ‘for social policy’

NZPA Paris By PETER O’HARA The Government aims to achieve lower company tax rates to raise money for social policy, the Minister of Finance, Mr Douglas, said yesterday. Mr Douglas, in Paris for talks with bankers and government economic policy makers, said he wanted to encourage companies to earn their income in New Zealand. He also wanted to attract international investment. "Competitive tax rates are one of the best ways to do that” and were a “crucial part of achieving social policy goals.” Nominal company tax rates in New Zealand were high by international standards, Mr Douglas said. The Minister said international experience showed that lowering marginal tax rates could actually increase tax collections from companies and high-income earners. Mr Douglas, who discussed taxation with the British Secretary of State for Social Services, Mr

John Moore, this week, said, "When Britain lowered its company tax rates from 52 per cent to 37 per cent, company tax increased fivefold, from £3 billion to £l5 billion over a seven-year period.” The Minister said money for “better health, education, social welfare and housing” would come from intemationally-com-petitive company tax rates. “Healthy, growing companies employing people — and choosing New Zealand as their place of operation — are essential for meeting our social obligations, and creating jobs and growth. “Low inflation is also a key element. That is why we have adopted a tight, anti-inflationary monetary policy. The short-term adjustment costs of achieving low inflation are far less than the costs of further high inflation,” said Mr Douglas. “But achieving our goals will also increasingly depend on achieving lower company tax rates.”