Rants, Raves, Reviews

The taxing question of business tax

By Gary R, in , posted: 28-May-2007 13:30

With the whole Labour 'we are giving business a tax cut but taking it off you again for KiwiSaver' initiative I got to thinking about business and tax.

In this country (my figures are approximates) most of the tax collected is PAYE so about $26b comes from the workers. Business on the other hand contributes $10b in corporate taxes. This is quite a difference really and goes to show that NZ needs people in paid employee to top up the coffers. What seems to be missed by people is that most businesses in NZ are 'sole trader' or a 'partnership' and these businesses pay PAYE not corporate tax. So, these little businesses that on average have 5 staff do not get the corporate tax cut but they still have to contribute to KiwiSaver. What a rip!

Recently Fisher and Paykel appliances announced that they are moving some manufacturing to Thailand with a loss of 200 NZ jobs. This move will save F&P $15M p/year. Looking through the last F&P annual report reveals that they paid $33M in corporate taxes. Wow!

Now we all know that business does as much as it can to get out of paying tax in this country and there are many ways to avoid paying tax especially if you are an NZ based subsidiary of a global monolith. So, why not just go sod it and either dump corporate taxes altogether or drop them to a much lower level? After all overseas movie makers get big tax breaks to come over here for 6 months to commit celluloid theft on our scenery but we give nothing to established businesses that are here for the long haul and provide so many jobs.

I just don't buy the excuse that we should leave all 'manufacturing to China' because we can not compete. I am sure F&P would have thought twice about moving to Thailand if corporate taxes were a lot lower and I am sure more overseas companies would consider moving here if there was more incentive. After all without business we don't have jobs and without jobs the government doesn't receive PAYE.

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Comment by Grant17, on 28-May-2007 14:30

Another excellent point made Jama...

Keep 'em coming

Comment by sbiddle, on 28-May-2007 14:53

Have you thought about a career in politics? National will need a communications minister with a brain next year.

Author's note by Jama, on 28-May-2007 15:01

Thanks Steve I will take that as a compliment

I might be too extreme for watered down, more left of the centre right - National

Author's note by Jama, on 28-May-2007 15:16

Thanks Steve I will take that as a compliment

I might be too extreme for watered down, more left of the centre right - National

Author's note by Jama, on 28-May-2007 15:19

Thanks Steve I will take that as a compliment

I might be too extreme for watered down, more left of the centre right - National

Comment by bradstewart, on 28-May-2007 18:16

Gary for PM anyone?

Comment by ZollyMonsta, on 28-May-2007 19:49

I wonder if corporate tax was dropped to a lower level, it would mean lower prices for the consumer. I continue to wish and dream! :)

Vote "The Jama Party" next election! ;)

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