10 October 2007
Fiscal Surplus shows that Tax Cuts are Affordable
Today’s announcement of an $8.7 operating surplus, more than $2 billion more than forecast, provides another strong
justification for the government to cut taxes according to the Wellington Regional Chamber of Commerce.
“While we are pleased that the government has achieved a strong and responsible fiscal position, month after month of
strong fiscal data suggests that the surplus is not only structural but unnecessarily large and that tax cuts are
affordable,” said Chamber CEO Charles Finny.
“The 3 cent reduction in the company rate announced in the budget was welcome but a wider package of tax cuts is needed.
Government must take steps to reduce personal income tax as well as company tax.
As for the argument that the timing is not right for tax cuts because of their inflationary impact, we remind government
that tax cuts are not inflationary if they are accompanied by a reduction in government expenditure and we believe there
is ample scope for this too.
“Tax cuts are not only affordable at this time, they are necessary. A lower, flatter income tax structure and a narrower
differential between personal and company tax rates would improve our international competitiveness and boost
investment, employment, productivity and economic growth in New Zealand”, Mr Finny concluded.
ENDS