Tax Working Group report applauded
The latest reaction to the Tax Working Group has seen the Auckland Chamber of Commerce find both positives and negatives in the group’s recommendations.
Chamber chief executive Michael Barnett applauded the thrust of the Tax Working Group report, which recommended the company, trust and top personal tax rates be aligned at 30%.
But he also had brickbats for the proposal to remove the 20% depreciation loading on new assets, saying it would unfairly penalise businesses claiming legitimate deductions.
He said new technology, work vehicles and office fit-outs were all examples of assets that depreciate over time and the ability to claim a 20% depreciation loading on new assets should be retained.
But the issue became more complicated when the depreciation of commercial
buildings was added to the mix, according to Mr Barnett.
He said while there was an argument that an exemption should be allowed for
manufacturing and industrial buildings, most commercial buildings continue
to appreciate in value.
“This is an issue of fairness. It is entirely reasonable for government to demand that if businesses claim a deduction for depreciation on an asset, then the asset should depreciate.
“Similarly, where an asset demonstrably loses value over time, then
businesses should be able to claim a deduction as a legitimate business
Overall, the Group’s recommendation found favour with the chamber of commerce, although Mr Barnett said personal income of up to $10,000 should
be tax free to offset the impact of a rise in GST on lower income families.
He said a rise in GST was the “best and fairest” means of clawing back the
revenue lost by alignment, but would have a disproportionately bigger impact
on low-income families.”