Corporate tax cut rate likely, says Cullen

Michael Cullen

Finance Minister Michael Cullen has told a foreign business audience the business tax review is likely to produce a mix of lower corporate rates and tax credits.

In a speech aimed at enticing Singaporean investment into New Zealand, Dr Cullen underlined the Government was looking to encourage greater investment in innovation and exporting.

"A current review of business tax rules is likely to produce an attractive mix of a lower corporate tax rate and tax credits, particularly helping those businesses focused on tackling overseas markets," Dr Cullen said in speech notes.

This year the Government announced its business tax review which canvassed a range of options including lowering the business rate and the introduction of credits to increase research and exports.

Final decisions are due in February or March next year with the extent of the changes dependent on predictions of taxation revenue in the coming years.

Dr Cullen has indicated cuts to the corporate tax rate are likely to have a flow on effect to personal tax rates.

Dr Cullen emphasised that while New Zealand's economy was having a "breather", the hard landing that some predicted had not eventuated.

Predictions of 1 per cent growth looked to be on the low side and 1.5 per cent growth in 2006 looked more reasonable now.

Inflation levels were "uncomfortable" and a sustained fall look sometimes off, he said.

The high current account deficit "should unwind slowly over the next few years.

Finance ministers throughout the Asia-Pacific region remained frustrated over the collapse of the World Trade Organisation's (WTO) Doha round as a multilateral trade deal was the best way to maximise world economic growth.

"We are realistic enough to know that waiting for the next WTO breakthrough is like watching England in a World Cup penalty shoot-out: there is always hope, but you have to accept that there is a chance that you will be disappointed," Dr Cullen said.

As a result New Zealand was working hard on regional deals and one-on-one talks with other countries.

Dr Cullen urged his business audience to invest in New Zealand.

- NZPA