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Phil O'Reilly.
The Government's proposed tax reforms will promote
economic growth and plug holes in the existing tax system,
business groups say, but a major union has criticised them.
Prime Minister John Key today indicated an increase in GST of
up to 15 percent, across-the-board tax cuts, and greater
taxation of property investments, aimed at making the tax
system more balanced.
The reforms demonstrated the Government had "a cohesive plan"
to bring significant improvements to many parts of the
economy, Business NZ chief executive Phil O'Reilly said.
"It is encouraging to see that the Government has a plan and
is sticking to it," he said.
"Lower income tax and an increase in GST, with benefit
adjustments to ease the transition, will be helpful for
business growth and competitiveness, and fairer to all."
Exporters would welcome the Government's commitment to rein
in spending, which would keep pressure off interest rates and
drive down the exchange rate, Mr O'Reilly said.
KPMG chief executive Jan Dawson said it was clear that the
Government was looking at the reforms as a broad package that
would ensure "a fair and coherent tax regime".
The rejection of a land tax or capital gains tax had provided
"welcome clarity", but questions still remained around
corporate tax rates, the amount GST would be increased, and
the impact of taxing property investments.
Employers and Manufacturers Association northern chief
executive Alasdair Thompson said the changes would make
employees better off and encourage saving and investment.
"These moves will go a long way to allow for reductions to
income tax across the board," he said.
"There is plenty of scope to plug holes in the income tax
base to ensure people are not overtaxed." Others were
critical of the reforms, with Council of Trade Unions
economist Bill Rosenberg describing the announcement as a
missed opportunity to boost jobs and make the tax system
fairer.
"It is good that the Government is still looking at options
for changing the way property is taxed ... but it has missed
an opportunity to make significant changes in our tax
structure," he said.
"This will only further encourage the development of the
'emerging underclass' he speaks about. The priority should be
to reduce inequality, not increase it."
