Joe Hendren

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Thursday, November 11, 2004

Anderton shots himself in the foot with call for corporate tax cuts

Jim Anderton's recent advocacy of a lower corporate tax rate has all the hallmarks of a cheap political stunt. He has attempted similar things before.

In the run-up to the 1999 election Jim Anderton stunned the Alliance Council by advocating that the Alliance should campaign for a top personal tax rate of 39c in the dollar, to cut in at $80,000. This was $20,000 higher than Labour's proposal, which became the top tax rate. I believe it was the same council meeting that Jim also tried to take the knife to many key Alliance policies, such as $20 extra a week for beneficiaries. Not surprisingly, the Alliance Council completely rejected Jim's proposal that the Alliance become a lower tax party than Labour.

While Jim's advocacy of a 30 per cent corporate tax rate may have given the hapless Progressive party some short term profile, for a party that supposedly advocates for greater social and education spending it was a dumb move. Jim now needs new shoes, as he has shot himself in the foot.

In the same week the Progressives announced a policy of write offs of student loans for students that stay in New Zealand for three years after they graduate. They say it will cost $100 million. No Right Turn thinks its similar to a 1998 National party education policy, and from memory I think he is right.

Hmm, $100 million. What is going to happen when the Progressive* attempts to advocate this policy? Cullen will simply make a crocodile smile and say "now Jim didn't you advocate for lower corporate tax, how do you expect to pay for both?", and Cullen will have a good point. The end result will be that the so called progressives will be even more lame duck in this parliament than they have been in this one. They will be unable to credibly advocate for anything that involves extra cash. And for a party that advocates greater social spending, that’s terminal.

On the 9th of October 2001 Jim issued a press statement challenging then new National leader Bill English to say how he planned to fund corporate tax cuts. “National needs to spell out how it can pay $300 million to cut the company tax rate...". Well Jim, now you have to spell out.

Advocating for corporate tax cuts is also likely to drain the funding of Jim's pet project, economic and regional development. At the time Jim Anderton was setting up the Ministry of Economic Development and Industry New Zealand, National and Act were making scathing noises about 'picking winners'. They told Jim to lower the corporate tax rate instead of providing active Government support to business. To his credit, Jim successfully rejected these calls and instead advocated how active government assistance to help to businesses to grow. The estimated $500m tax cut could buy a lot of economic and regional development Jim. Corporate tax cuts are just a return to the flat, scorched earth business policies of Ruth and Roger.

It now appears Andrew Little of the EMPU now regrets rushing to Jim Anderton's aid following his defection from the Alliance in 2002. Giving the $20,000 to the Alliance and endorsing Laila Harre in Waitakere in 2002 would have been a safer bet, and now Laila could be providing Labour with an extra seat buffer, a seat that could save the Government majority in the event John Tamihere resigns from Parliament. Eventually, that decision was always going to bite Labour on the bum.

In another ironic twist, Cullen and Anderton were at odds on this issue in May 2000, but on opposite sides of the argument. On the 12th of April 2000, Cullen made a speech to the Asia Society in Hong Kong where he suggested reducing the company tax rate "when fiscal conditions permit", although he made it clear it was not a priority. In response Anderton said Cullen had not discussed corporate tax cuts with him, replying that "People might like to do without taxes altogether when fiscal conditions allow. Anything might happen when fiscal conditions allow. I'd like free education and free health when fiscal conditions allow" (Dominion, 13th April 2000).

To make matters worse, he is now making a direct comparision with the 30 per cent corporate tax rate in Australia, despite the fact that he previously argued (correctly) that his was not a good comparision because Austrialian companies pay additional taxes that NZ companies do not, such as captial gains taxes.

The large colour advertisements that appeared in this weeks papers were apparently paid for by "Progressive party supporters". There was no Parliamentary Crest so no public money could legally be used to pay for the ads. Is it just a chance thing that the same week Jim is advocating corporate tax cuts he suddenly finds the money for several 3 x 1/4 colour advertisements in major newspapers? Did some corporate come up with the cash so Jim could instigate a tacky little coup from inside the Government? If it was a donation over $10,000 we will know by April next year when the electoral commission releases the return of party donations....

*as it is likely there will only be Jim

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