READER REPORT:

Can you fix the economy? We need visionaries

MURRAY HAWKES
Last updated 09:30 17/12/2012

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Why is it easier to manufacture and run services from offshore than in New Zealand?

1. Running a real business in New Zealand is increasingly complex and the rewards are decreasing. For example, indications that employers will need to pay tax on car parks provided to staff, and on accommodation provided even when work is done away from the normal place of work, will both have a direct cost on businesses and become a massive administrative burden.

2. The tax system disincentivises investment in productive activities. Machinery and building depreciation rates make purchasing modern equipment and value-creating machinery too much of a risk. If you buy a manufacturing robot which may give you a business advantage over two to five years but it depreciates over ten years, you subsidise the work being done in New Zealand. Instead, the Government should be providing a subsidy to encourage investment in technology by accelerated depreciation where jobs are created. This is why New Zealand's per capita productivity continuously falls compared with OECD.

3. Offshore locations subsidise and encourage employment creation directly. Thailand will give a three-plus-three year tax holiday for a new business providing employment.

4. We fail to see the long term benefits of maintaining productive capacity.

5. We encourage capital flight by taxing all forms of income-generating investment, except capital gains on property.

We need some business visionaries in Government, not a banker used to just clipping the ticket.


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