John Key MP - National Party Finance Spokesman

27 February 2006

Aust tax move should be mirrored in NZ

An Australian Government move to appoint a committee to urgently study whether Australians are overtaxed puts New Zealand in even more danger of being left behind, says National Finance spokesman John Key.

He says the two-person committee appointed by Treasurer Peter Costello, which is charged with reporting back within five weeks, is a serious competitive challenge for New Zealand.

The committee will look at how Australia's income, business, superannuation, property, indirect and transaction taxes compare with international and regional competitors.

"This shows we should not delude ourselves about how Australia wants to ensure it keeps its edge and manufactures an environment that makes its businesses internationally competitive," says Mr Key.

"One of the most important things to consider with tax design is your relative position with other countries. This move risks putting New Zealand even further behind.

"We are simply out of step. Australia wants to do something within five weeks. We have to wait until 2008 - and even then we may not get the chewing gum tax cuts.

"They are constantly seeking to share the benefits of their economy, while the Labour-led Government here constantly seeks to spend it on ministers' pet projects.

"It is also interesting to note that at a time when New Zealand is looking to suck more and more people into a suffocating web of high effective marginal tax rates through Working for Families, the Australian Government wants to eliminate them.

"If we have had 40 per cent higher GDP growth than Australia this term, as this Government keeps claiming, then maybe Labour can explain why Australia can afford tax cuts when we can't.

"Australia now looms as an even greater competitive threat to New Zealand, and lower taxes across the Tasman will do nothing to arrest the departure of our best and brightest."

ENDS

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