Douglas returning to N.Z. early today

Press, 30 January 1988, Page 6

Douglas returning to N.Z. early today

By

TONY VERDON

London correspondent The Minister of Finance, Mr Douglas, has abruptly curtailed his overseas trip after Government colleagues deferred the introduction of his flat tax proposals. He boarded an Air New Zealand flight for Los Angeles, instead of travelling on to an international economic forum in Switzerland. Mr Douglas appeared philosophical about the setback when he was questioned just before leaving London, although he said: “You know me—- — have always believed in the sooner the better with these things.” The decision to defer the tax changes would have embarrassed Mr Douglas, who has spent the last week promoting them to British politicians, financiers and business people. He is known to have had the statements on the

deferral by both the Prime Minister, Mr Lange, and Opposition members of Parliament, facsimiled to his hotel room overnight. While he was not expected to leave London for Switzerland until early afternoon, he instead left his hotel at 10.30 a.m. Questioned as he hopped into his car for the airport, Mr Douglas said the need for a delay in the introduction of the flat tax rate had been obvious when it was decided to wait for the report of the Royal Commission on Social Policy. He said that once it had been decided to wait for the commission report then the delay in implementing the proposals was obvious. “The introduction of the Goods and Services Tax was six months late so I suppose these things happen sometimes,” said Mr Douglas.

The Minister defended the move towards a single-income tax rate in a speech to the London Chamber of Commerce on Tuesday, where he described it as “a great step forward for the efficiency of our tax system.” He said a flat rate would eliminate the effect of fiscal drag which had been a politically convenient means of financing creeping Government spending. A flat rate of personal taxation would place a new discipline on Government expenditure. It would help “to put some muscle behind fiscal good intentions,” said Mr Douglas. However, in the speech he also acknowledged concern about the effects a flat rate would have on low-income people, saying that concern would be met by a proposed guaranteed minimum family income support scheme.