Reducing business tax to a flat 10% - good or bad?

Last week there was a flurry of media activity around reducing business tax to a flat 10% to aid  recovery and investment in Canterbury.

Superficially this sounds attractive but practically I cannot see how it would work.

I was asked for comment by the media and the full text of my comment is as follows

"I personally do not favor a differential business tax rate. My board has not considered this specific proposal. It would create too many distortions and would be an administrative nightmare. The relative  simplicity of our NZ Tax system is one of this country advantages. The key to encouraging business and investment is to concentrate on creating an environment that is overtly supportive of business. All stakeholders need to recognise the importance of being encouraging and welcoming of business. We need to establish a reputation as a city, and a community, of being seen to be overtly supportive of existing and new business and investment. We also need to be seen to be action-orientated, strategic and efficient in the context of the rebuild. Finally it is vitally important that Central Government, Local Government and the community are all being seen to be working towards common objectives. That will encourage investment."    

As we gear up fully for the recovery, supporting businesses right across the rebuild environment in all ways is going to be critical. We want Christchurch to be seen to be the easiest place to do business in New Zealand and we want all stakeholders to embrace and deliver on that concept.

www.cecc.org.nz