Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
[Volume:625;Page:20222] 
2.  
CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Minister of Revenue 
: What recent announcements has the Government made on business tax and what response has he received? 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 Last week I announced a raft of changes: cutting the most important fringe benefit tax rate simplifying a whole range of tax measures in relation to fringe benefit tax and provisional tax a subsidy for small businesses to assist with the employment of payroll companies and other matters. Those were warmly welcomed. One tax practitioner for example described them as cutting out a huge amount of compliance work for small businesses. 
Clayton Cosgrove 
: Have there been any other further reactions or reports? 
Hon Dr MICHAEL CULLEN 
: Yes the managing tax partner at Deloitte Thomas Pippos noted that the fringe benefit tax changes in particular were likely to benefit a large number of firms. A PricewaterhouseCoopers spokesperson said that the changes should drop a lot of firms out of the fringe benefit tax net altogether and even the National Party said that they were a practical step towards reducing compliance costs. 
John Key 
: What is the logic behind today’s announcement of a new carbon tax that has the perverse outcome of seeing a large number of businesses paying a new tax that will in part be used to subsidise a much smaller group of their own less efficient competitors? 
Hon Dr MICHAEL CULLEN 
: The carbon tax is a market-based mechanism designed to reduce greenhouse gas emissions. I would have thought that the National Party would welcome market-based mechanisms as opposed to purely regulatory ones. 
John Carter 
: I raise a point of order Madam Speaker. The question put by my colleague John Key asked why efficient businesses should subsidise inefficient businesses and was not about whether greenhouse taxes are appropriate. The Minister did not address the question. He mentioned the words “carbon tax” which does not mean that the question was answered. The question was about whether a business should be subsidised by another business. The Minister should address that question. The fact that he mentioned the words “carbon tax” does not mean to say that he addressed the question. 
Madam SPEAKER 
: The Minister did address the question. This is another example of a member not perhaps getting the answer he or she wished to get. 
Gordon Copeland 
: Does the Minister stand by his reported statement that those announcements plus those to come in the Budget are equivalent to a 2c in the dollar reduction in the corporate tax rate; if so why does he not just simplify things and reduce the corporate tax rate to 31 percent thus maximising the encouragement to new business investment in New Zealand including that from overseas? 
Hon Dr MICHAEL CULLEN 
: It is absolutely apparent that given the propensity in New Zealand for the payout of any profit doing that for onshore investors would simply result in a taxation timing change and for offshore investors would result simply in net profit being repatriated out of the country. Neither would necessarily do anything to lift the rate of economic growth—as opposed to enhancing investment as opposed to simplification and as opposed to the use of new equipment.