How New Zealand responds to Australian tax changes will make a big difference to our economy, says BusinessNZ.

Chief Executive Phil O’Reilly says Australia’s planned rate of 28% by 2014 will have to be at least matched by New Zealand otherwise it will simply mean investment dollars flowing to Australia instead of here.

“Australia’s switch from 30% to 28% over four years is a relatively modest reduction, so matching it – or better – should be relatively achievable for us.”

Mr O’Reilly said it will be important to take account of all the major costs that businesses in both countries face.

“On one hand Australian companies, unlike New Zealand firms, are required to make significant superannuation contributions.

“But on the other hand, New Zealand with a higher company tax rate as well as an emissions trading scheme would face a double whammy larger than the impact on Australian businesses of their super contributions.

“Business in New Zealand will be expecting our Government to make and communicate an early decision on when we will drop our company rate below 28%.”

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