ACT eyes company tax cut to hike economic growth

ANDREA VANCE
Last updated 12:40 03/08/2014
Jamie Whyte
MICHAEL FIELD/Fairfax NZ
ACT LEADER: Jamie Whyte.

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ACT says it can boost economic growth by a third with a policy to cut the company tax rate to 12.5 per cent.

Leader Jamie Whyte says this will increase investment, and job and GDP by one third, leading to higher wages.

He would fund the tax cut by slashing "corporate welfare," worth about $1.5bn a year, and carbon trading, worth $164m.

The current corporate tax rate is 28 per cent. Over the year to March, GDP grew by 3.3 per cent.

Whyte unveiled ACT'S economic policy at a candidate's meeting in Auckland this morning.

European and American studies suggest cutting the rate by 10 percentage points will make economies grow by between 1 and 2 per cent extra a year. Each 1 per cent reduction in the rate boosts wages by between 0.3 and 0.5 per cent, he said.

"No single policy proposal from any party in this election can do more to increase economic growth, create jobs and lift wages," he added,

Company tax is a "terrible drag" on growth and wages while raising "relatively little" revenue, he argued.

"The Labour party and their left-wing allies will no doubt complain that this is yet another ACT policy aimed at benefiting 'the rich.' They are wrong because, as explained, the primary beneficiaries of a lower company tax rate are workers whose pay increases."

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