Business is relieved despite the Budget's
blandness reports Richard Braddell.
WELLINGTON - Having copped out on vision, the business community was at least thankful that the Finance Minister, Bill Birch, presented a responsible Budget yesterday.
While various business leaders described the measures as "a bit stingy", or lacking the "wow" factor, they were
thankful that the archaic stamp duty on property transfers had at last been abolished.
Applauding its departure, a tax partner at PricewaterhouseCoopers, John Shewan, said the 2 per cent tax levied on real property transfers such as land, buildings, forests and power lines, had foisted a huge cost on the electricity industry's restructuring last year.
"It was a pain in the neck to businesses and it resulted in many restructurings being frustrated," he said.
Getting rid of the tax, which has been imposed since 1867, will cost $70 million in the current year, and $224 million over three years.
Nevertheless, Mr Shewan found it surprising that there had been no pointer to a possible reduction in the corporate tax rate, maybe to 30 per cent.
Identifying tax as the defining issue between the two major parties leading into the election, he said the Budget could have "made the line brighter".
"I'm not sure whether that is being fiscally responsible or politically cunning," Mr Shewan said. But he said that tax cuts could still be foreshadowed later in the year if economic growth provided the fiscal headroom to do so.
Mr Shewan also saw difficulties with the parental tax credit since it was in direct conflict with the Government's aim of reducing the compliance cost in filing tax returns by relieving 1.1 million New Zealanders of the obligation from next year.
Details of how the credit, worth $80 million over three years, will work have yet to be given, but it seems likely new parents will have to file a return to get the money which will be available only at the end of the financial year.
The chief executive of the Auckland Regional Chamber of Commerce, Michael Barnett, said every interest group achieved something positive from the Budget, but he said it still left an empty feeling.
"It's responsible, but bland. I feel like Oliver Twist. 'Please Sir, can I have some more?'"
Mr Barnett's counterpart at the Wellington Regional Chamber of Commerce, Claire Johnstone, welcomed the abolition of stamp duty and the broadcasting fee, but still saw them as "rats and mice".
"Cost cuts to stamp duties and the broadcasting fee are welcome, even if a bit stingy," said Alasdair Thompson, chief executive of the Employers & Manufacturers Association. "The overriding issue is the need to boost export earnings ... we have to, at least, keep up with Australia's competitiveness or we will lose more of our industry and job opportunities across the Tasman."
The Business Roundtable agreed the Government had not gone far enough. "The Government's plans to reduce income taxes would be positive for economic growth, but it was disappointing that it had not committed itself to firmer goals," said chairman Bob Matthew.
More outspoken about the needs of exporters being ignored was the Export Institute. Bob Fenwick, managing director of manufacturing business Planhorse Systems and institute board member, said the Budget "shows no vision and frankly doesn't appear to have within its ranks of advisers anybody who understands the real needs of the country."
Vision gives way to fiscal responsibility
Business is relieved despite the Budget's
blandness reports Richard Braddell.
WELLINGTON - Having copped out on vision, the business community was at least thankful that the Finance Minister, Bill Birch, presented a responsible Budget yesterday.
While various business leaders described the measures as "a bit stingy", or lacking the "wow" factor, they were
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