The Mood of the Boardroom, as well as providing a broad snapshot of business sentiment, also highlights differences between types of companies.

This is of interest to  BusinessNZ as our membership ranges from the largest to the smallest companies in New Zealand.

This year the difference is evident in responses about tax.

The corporate tax rate was rated as the lowest of eleven concerns for small and medium sized companies – behind issues like petrol costs, inflation, roading and exchange rates.

Understandably, petrol prices and road congestion are more ‘in your face’ on a daily basis and could be expected to rank higher as a concern among SMEs than tax rates.

But this low rating is also interesting in light of the Government’s recently announced business tax review proposals.

Of course, because the review relates to corporate tax only, the proposals have no relevance to many small businesses.

Most New Zealand firms are small and unincorporated.

The review therefore fails to address the over-taxation of thousands of firms that pay tax at the top personal rate of 39%.

Reducing the business rate to 30% will not help them. A more integrated solution – of both business and personal taxes – is required.

Meanwhile, for large companies, the corporate rate is vitally important. To them, a reduction in the corporate rate to 30% is not a particularly bold step. Australia could outflank us by reducing its rate below 30% before the Dunne review is even finished.

Yet the importance of lower business tax to larger companies is clearly captured in this year’s Mood of the Boardroom survey. Asked whether they would invest more in their business if the corporate rate were cut, 81% said they would.

Given that more investment is required for New Zealand companies to improve their assets, upskill, grow and export more, this response is telling.

More than 80% of large businesses reinvesting at a greater rate as a consequence of a cut in the corporate rate – this is a major outcome, and indicates the need for bold, not timid, reductions in business tax.

An initial rate of 30% would be useful as a first step only if there were further rapid reductions in the short term, and if consideration was given to alignment of personal and business tax.

Companies both large and small have suffered from our tax regime for too long. It has been nearly 20 years since the last reduction in company tax, and over that time the top personal rate has increased significantly.

This contrasts with the overall downward trend of taxes in other developed countries.

The Mood of the Boardroom confirms the undeniable fact that New Zealand companies of all sizes could compete and grow better with a better tax regime.

Contact:

Phone:

Email: