Government acknowledges merits of full capital expensing – but why just bloodstock?

17 MAY 2018

The Taxpayers’ Union is welcoming the underlying principle in the only tax change announced as part of today’s Budget 2018 to promote economic growth: full capital expensing of bloodstock.

“Allowing full expensing of capital investments is the best tax reform no one has heard of,” says the Union’s Economist Joe Ascroft.

“This is the rocket Donald Trump has put under the American economy in its recent tax reform. The economic advice is that it would massively increase business investment in capital and accelerate productivity growth. Productivity growth is the most relevant factor in determining income growth – the measure will lead to increased wages.”

“The obvious question is why the Government would choose to favour just a single industry or special interest? That’s an outrageous way to run a tax system, and isn’t fair to the hard working employees and employers in other sectors.”

Editor’s note: The fiscal impact of full capital expensing is largely temporal. Full expensing pulls forward any existing tax benefits into a single year, rather than increasing the total value of any tax benefits. More information can be found at paragraphs 71 to 77 in the Taxpayers’ Union submission to the Government’s Tax Working Group, available at http://taxpayers.org.nz/twg_submission.

ENDS

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