Call for Christchurch flat tax
Thu, 24 Jan 2013 7:42a.m.
By Dan Satherley
A leading economist has called for a flat tax in the Canterbury area to attract businesses and assist with the rebuild.
"I'd like to see them look at Canterbury… it would be great to see them bring in a low flat tax of say, 10 percent, within the Christhchurch, Canterbury area to encourage new businesses," Sam Stanley of the NZX told Firstline this morning.
"Ring-fence that Christchurch area and see if they can encourage new businesses to come in and activity to be fuelled out of the Christchurch zone.
"I think that will be a very, very positive thing – it's been done in other areas before and has worked successfully."
Mr Stanley also says the New Zealand market, coming off a great 2012, is "pretty excited" at the prospect of the country's power companies going on the block.
Trading on the New Zealand Stock Exchange jumped more than 20 percent last year, with $30 billion worth of shares traded.
"I think the landscape out there is still pretty strong," says Mr Stanley. "We had a very strong performance last year… and really, the same fundamentals are in place." He says low interest rates, unaffordable housing and a lack of investment alternatives is driving trades on the exchange.
The improving outlook in Europe is also helping.
"Certainly with regards to the general feeling around risk and appetite in the market, what's happened in Europe has been pretty impressive in the last few months or so, restored confidence."
If the Government successfully manages to sell of up to 49 percent in state assets such as Mighty River Power, Mr Stanley says it will act as a "buoy".
"It will provide another great investment for New Zealanders to get involved in. There will be a lot of interest building ahead of the partial floats, so from the point of view of potential investors with money to look at putting into stocks, there are some very good upcoming floats potentially.
"It's widely anticipated in the market and everyone's pretty excited about it."
New Zealand's inflation rate at 0.9 percent is "non-existent" he says, and could lead to the Reserve Bank dropping interest rates.
"They could easily do so, and I don't think there's a single economist out there that would disagree with that."
He says the only fear is creating another bubble in the Auckland housing market.
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24/01/2013 12:40:07 p.m.
This man is completely out of touch with reality, the last thing people that have lost their homes need is to face increased taxes, especially at a flat rate as flat tax rates are not discriminatory unlike our graduated personal income tax structure.
24/01/2013 8:45:04 a.m.
Down with share trading!!! It should be illegal! It does nothing for the world but motivate businesses and people to do bad things.
24/01/2013 8:02:22 a.m.
This idea is flawed.This would see NZ businesses relocate headquarters to Christchurch for the lower rate and policing the tax change would be difficult. Its a disaster waiting to happen.The reality is businesses pull in much more tax in PAYE and GST than they ever pay in income tax. If take a business that pays wages, they can pay up to 48% of revenue on GST and PAYE without even making any profit. What little profit they do make is currently taxed at 28%.Around the world the average business tax rate is around 20% and NZ is high at 28%. If we lowered all business tax rates we wouldn't have the tax nightmare the economist is proposing, and the extra businesses would be paying much more PAYE/GST and increasing the tax take of the country for very little reduction in income taxes. That extra business would also employ mmore people and could look to reduce our umemployed numbers if they can be bothered to get out of bed for it. We still have many who say 'I wouldn't get out of bed for that!' and those people wont change so even if NZ had 200,000 more jobs available those people would still be unemployed as they are unemployable.
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