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 

So we are back and ready for action!

I hope most of you managed to find time to catch a bit of a break. I did, in beautiful Wanaka. I have attached a sunset that was one of the more attractive I saw. It was good to get away and reflect on the past year. I also spent a fair amount of time considering what we have ahead of us  in 2013.

I have no doubt that this is the year when our problems will mostly be around managing the scale of the Christchurch rebuild. Already (and over the holiday break) there was significant debate about where and how the people we require for the rebuild will be sourced. We can also expect significant strain on other resources. It is a little scary that more ready-mix concrete is being poured in Christchurch right now than in the whole of Auckland. This says to me that we need to be thinking lead times, we need to be considering how we are going to manage the growth of our businesses and we certainly need to be positioning ourselves to maximise the advantage we gain from being involved in New Zealand’s biggest ever Economic Development project. As always CECC is at your service, refreshed and ready to assist you with all of your business issues. Happy New Year!

www.cecc.org.nz