By ANNE GIBSON
A tax rate of 10 per cent but a GST rate of 25 per cent is proposed by property developer Andrew Krukziener as a way to make New Zealand more attractive to overseas investors.
Speaking yesterday to a lunch for the New Zealand and Israel Trade Association at the Metropolis in Auckland, he posed a question about New Zealand's future direction: are we to become the Switzerland of the South Pacific or the new Dunedin of the 21st century?
The future depended on attracting overseas businesses, as well as on immigration, tourism, education and the export and import of ideas and companies, he said.
Part of the key to our future lay in tax reform, he said. New Zealand had two big drawbacks: a 39 per cent disincentive and a 33 per cent disincentive, he said.
Reforming tax and pegging income tax at a flat 10 per cent but GST at 25 per cent would be administratively cheaper, fewer people would seek to avoid taxes and we would have a chance to attract major foreign investment capital.
Although the scheme was radical and would take time to implement, it would prove an incentive for international companies.
New Zealand had a "do not disturb" sign up for the rest of the world, he said.
Mr Krukziener opened by outlining a pessimist's view of our future:
Large corporations would continue to leave New Zealand for Australia.
Office efficiencies would continue to reduce the floor areas occupied.
New office development in the city would leave a huge number of lower-grade buildings empty.
Tenants would continue to move to the city fringes.
Inner-city apartment development had become a fad.
Advancing technology and communications made it easier for international corporates to operate overseas.
Population stagnation or reduction continued, and our best people headed overseas and did not return.
But Mr Krukziener said New Zealanders could take many steps to avoid this sad future. They included creating the low-tax regime to bring overseas companies here, increasing overseas visitor numbers by taking a coordinated approach in the industry, increasing immigration and raising education standards.
"If such steps were undertaken, a more optimistic view could be taken of our future."
Among his points for the optimists were:
New biotech and software companies would continue to expand.
We would become a niche marketer of intellect in the agriculture technology and computing fields.
A few big international corporates would relocate part of their operations here due to our low office costs and cheap labour, thereby taking up all our vacant office space.
In three years, all the firms which had downsized and gone open plan would realise the productivity loss this caused and would relocate, requiring 30 per cent more space for large and private offices.
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