Flat tax ‘protection’

Press, 26 January 1988, Page 4

Flat tax ‘protection’

PA Auckland Low-income earners should be protected from the effects of a flat tax rate, says the Isle of Man Treasury Minister, who is on holiday in New Zealand. As the man presiding over one of the world’s most famous tax havens, David Cannan said in Auckland yesterday that it was important that flattax schemes such as the one proposed by the New Zealand Government should protect the spending power of low-income earners. Tax in the Isle of Man was at a flat rate of 20 per cent, but the first £6OOO ($16,500) a year was tax-free, Mr Cannan said.

It was important to have such an allowance because money spent by those at the bottom of the income scale went

directly on consumer items, making the economy more buoyant. “You do not reduce the rate of taxes without on the other hand raising the personal allowances,” said Mr Cannan. "You increase the personal allowances because that tends to boost the economy by putting money on the street.” Mr Cannan said a personal allowance scheme was preferable to income maintenance payouts from the Government, which were a clumsy administrative method of protecting the poor. The New Zealand Government is considering the details of such a scheme. Mr Cannan is here with his New Zealand-born wife, Patricia, and son, John, aged eight. There are no official talks planned with the Government.