By Rob Hosking
Friday 28th September 2001 |
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The government takes in about $4.5 billion in company tax each year.
"Companies are under increasing pressure to pay tax outside New Zealand if they can," Mr Shewan, a senior partner with PriceWaterhouseCoopers, told The National Business Review yesterday.
Partly this was due to the 33% company tax rate - now the highest in the Asian Pacific region, he said.
Roughly 40% of the company tax take is attributable to the financial services sector - banks, insurance companies, and savings and superannuation houses.
The next largest sector, in terms of tax paid, is manufacturing, but this is well down at 18%.
Not only is much of that sector owned offshore, but it is also increasingly tending to invest offshore, due to a poor performing sharemarket and the pressure the New Zealand currency has been under for more than a year, Mr Shewan said.
"Second, that sector is the one impacted most dramatically by technology, and because of that it now undertakes a lot of its activities - such as treasury functions and the like - offshore.
"And because the sector pays 40% of the company tax take it is going to have an impact of some magnitude on the government accounts."
A third factor is other industries are also transferring functions offshore - again, a technology and tax driven move.
There has been a higher than expected company tax take in the most recent financial year, but Mr Shewan said this is driven mostly by the government's imposition of a 39% top personal tax rate on incomes over $60,000.
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