New Zealand aims to align tax rates, boost capital markets
WELLINGTON, Feb 18 (Reuters) – New Zealand wants to align tax rates paid by company, individual and trusts to improve the country’s economic performance and is also looking at policies to boost its capital markets, government ministers said on Thursday.
Finance Minister Bill English said his government’s medium-term goal was to have company, trust and top personal rates at the same level, but was looking to see if such a move was affordable and fair.
“Our early advice is that aligning the trust and top personal tax rates is the most important issue,” he told a business group, adding that substantial gains could be made from this with the company tax rate not too far below.
New Zealand’s top income tax rate is currently 38 percent, trusts tax 33 percent, and corporate tax 30 percent.
He said the government had not decided whether to change the current corporate rate, which needed to be competitive internationally.
“New Zealand’s company rate can’t get too far out of line with Australia’s,” English said.
Australia’s company tax rate is also at 30 per cent, but is under review as well.
English also said the current imputation system for company dividends, which prevents company after-tax payouts being taxed a second time when paid to shareholders, would be retained.
“Both New Zealand and Australia have this system and imputation plays an important role in our overall tax system.”
Last week, Prime Minister John Key said the tax system needed reform to encourage more investment in production, which might include raising valued-added tax to 15 percent but cutting personal taxes to compensate, as well as tightening the taxation of property investments.
Separately, the NZ government said it was looking at policies to boost local capital markets, improve investor confidence, and develop derivatives markets in commodities and energy.
Commerce Minister Simon Power said he would move to implement parts of a taskforce report from last December, which said the country’s capital markets needed urgent reform to improve investment and business growth.
“For companies, capital markets need to be more accessible and more effective at providing funding at least cost, and tailored to their growth aspirations,” Power said.
Among the measures to be taken were simplifying financial documents and beefing up consumer warnings, improved supervision of financial advisors and fund managers, and simpler securities laws to make it less expensive to raise capital.
Power said the government was also looking at creating a new market regulator by merging parts of the Companies Office, Securities Commission, and the NZX Disciplinary Tribunal.
However, he said a recommendation to partially float state-owned assets to boost markets would not be adopted, given the government’s election promise not to do so in its first term. (Reporting by Mantik Kusjanto and Gyles Beckford) (Wellington newsroom tel 64 4 471 4234, fax +64 4 4736 212, firstname.lastname@example.org) ((If you have a query or comment on this story, send an email to email@example.com))