'Timid' step in right direction

Fisher & Paykel Appliances chief executive John Bongard said a business tax cut proposed by the Government would "obviously be of assistance" in maintaining the competitiveness of the company's local operations.

Targeted assistance for R&D and export market development "particularly appeals to us".

But Bongard warned the measures were still only proposals.

"To have a discussion document is great and a step in the right direction but ... it's what comes out at the other end that's important to us."

Bongard's reaction mirrored that of other manufacturers, who have welcomed proposals for a company tax rate cut and targeted tax credits. But business groups say the cut is "timid" and falls short of what is needed to deliver a real economic boost.

Topping the list of proposals from the Government's Business Tax Review was one to cut the company tax rate from 33 per cent to 30 per cent.

Skellmax managing director Donald Stewart, who hadn't been expecting great things from the review, welcomed the tax cut proposal at least.

"We didn't have any expectation that it would drop any more than the 30 per cent but anything that's going to help our competitiveness offshore will be of value in principle.

"It brings us more in line with the Australian market, which is a big competitor for us."

NZ Chambers of Commerce chief executive Charles Finny said it had been useful to have confirmation that "the end product could well be a mixture of measures".

The reduction in the company tax rate was a step in the right direction, but as the discussion document released yesterday highlighted, "the OECD average is now below 30c in the dollar so as a basic principle we should be at that level, if not below".

"It seems to reinforce our view that we should be looking at something closer to the 25c in the dollar mark," Finny said.

"We certainly see this as helpful and a step in the right direction but if we're really going to transform the economy as the Government wants and achieve productivity growth we're going to have to be a little bit bolder."

That sentiment was echoed by Business NZ chief executive Phil O'Reilly, who described the tax cut as "pretty timid".

While the proposed cut was in line with Business NZ's recommended first step, "it doesn't suggest how we're going to move it down further or stay competitive with Australia".

That was an issue as Australian Treasurer Peter Costello was talking about further lowering Australia's corporate rate from 30 per cent.

O'Reilly was also suspicious of the targeted tax credits for R&D, export market development and skills improvement which were akin to "picking winners".