Brash asks rich to wait for tax breaks

Business leaders queued yesterday to shake National Party leader Don Brash's hand even after he said high-income earners would have to wait for tax cuts.

"Our first objective is to provide relief for low-to-middle-income earners," Brash told an Institute of Directors' breakfast, which had to be shifted to a larger venue to cater for demand.

The audience was told of a tax-policy shift that Brash said was designed to counter the Government painting National as concerned only about the affluent.

National went into the last election promising to cut company tax to 30 per cent from 33 per cent and the top income rate to 35 per cent from 39 per cent. It aimed to cut both to 25 per cent in 10 years.

It is now promising to cut company tax to 30 per cent and is not saying what personal tax rates will be cut to beyond that priority will be given to low-to-middle-income earners.

"I know that many of you will be disappointed that I am not signalling a commitment to a substantial reduction in the top rate immediately," he said. "I know too that purists will highlight the undesirability of such a large gap between the top personal tax rate and the 30 per cent corporate tax rate which I have proposed.

"In effect, what my colleagues and I are doing is asking those in the higher salary bracket to be patient.

"Clearly, we want to give ourselves, as a Government, room to provide relief for the very large numbers of people in the middle-income brackets."

The proposed corporate tax rate was a step in the right direction but it needed to be lower than Australia's to give New Zealand a competitive advantage, Business New Zealand said.

Roger Kerr of the Business Roundtable said National's tax policy redistributed, rather than promoted, growth and no explanation had been given for the change.

"National's priorities are now the same as the Government's," he said.

Big differences between the personal and company tax rate were bad policy because they promoted evasion and had higher compliance costs.

Brash said he was not involved in making the previous National tax policy and he was not sure how realistic it had been.

He said that the Government's Budget surpluses were "on balance too high".

There was a need to spend "a little more on defence" and on education and training of the long-term unemployed. He repeated that Australians believed New Zealand was not carrying its weight on defence matters.

"I believe Australia ought to be our closest friend and ally."