KEY POINTS:
The business tax changes the Government announced yesterday can be seen as an exercise in scraping barnacles off the keel in hopes of making the boat go faster.
Tax accountants describe them as welcome, pragmatic and modestly positive.
They are more about reducing compliance costs and easing pressures
on firms' cashflows than lightening the final tax burden they face.
In times when people are slower to pay their bills and business is drying up faster than most had expected, even temporary relief to working capital requirements is worth having.
By the same token the cost to the Crown's revenue is modest - as Finance Minister Bill English had foreshadowed.
"Nearly half a billion dollars" sounds a lot until you hear the "over the next four-and-a-quarter years" bit.
Modesty is often a virtue, and not least when it comes to fiscal costs. Especially so in times like these when ratings agency Standard and Poor's, as a proxy for our offshore creditors, is impatiently strumming its fingers on the desktop at us.
Deloitte's tax partner Thomas Pippos detects in yesterday's announcement a signal of a new pragmatism and realism in tax matters - a willingness to give less weight to risk-to-the-fisc considerations and more to making commercial life a little easier when it can.
PricewaterhouseCoopers' Geof Nightingale agrees. The Government is making a judgment that the value the economy gets out of lower drag on businesses' operations outweighs the fiscal cost, he says.
Interest rates for under- and over-payment of provisional tax have been lowered. For underpayments they are no longer penal but still high enough to avoid any risk that taxpayers will use the IRD as a bank.
But the sting in the tail, Pippos says, is the lower rate the IRD will pay if provisional tax is overestimated. And that is much more likely in the current economic climate than it would normally be - as the Government itself recognises by dropping the default assumption that provisional tax payments will need to be 5 per cent higher than in the year before.
Moving some 15,000 businesses from paying PAYE twice a month to once a month will improve cashflow for some struggling firms, says Ernst and Young's Jo Doolan, but they still need to remember failing to pay PAYE is a criminal offence. The taxman will always want his pound of flesh - even if he is willing to wait a bit longer for it.
