No one has any interest in admitting it, but Michael Cullen’s 2007 Budget has been very much a pro-business one. Here are its main features:
- A drop in business tax from 33% to 30% (symbolically, this is the first corporate tax cut since Roger Douglas was finance minister) at the cost of $2.1b
- Tax credits for business research and development of $630m
- A new tax exemption for NZ-controlled foreign companies to globalise at a lower tax and compliance cost (costing taxpayers $112.5m)
- An additional subsidy to business of $87.8m for the Market Development Assistance Scheme to encourage firms to take new products to new markets
- $53m to boost participation in industry training
- A reduction in the tax rate from 33% to 30% for savings portfolio investment entities, (costing taxpayers $180m)
- A tax-free gifting to charity policy to promote private philanthropy (which is a wholesale steal of National Party policy)
- Legislation to allow local authorities to make consumers pay higher petrol prices to fund new transport projects (which is a very regressive taxation policy that will hit the poor hardest)
- A cancellation of the previous announcement to move the tax thresholds for inflation (which particularly hits low income earners - as Susan St John points out: ‘Inflation has been cruel in producing rising average tax rates for low-income workers. The first tax bracket has not been adjusted for inflation since it was set in the late 1980s’)
- A new KiwiSaver scheme which will most benefit employers and the rich – as argued in my posts on Labour’s left-sounding policies and KiwiSaver: actually quite nice for business.
As NoRightTurn correctly argues, ‘Labour's departure from its roots and its capture by the rich couldn't be any clearer.’
