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Calls to match Aussie tax changes continue

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 4 NZPA - An increase in compulsory employer contributions to superannuation in Australia may see more New Zealanders moving across the Tasman, commentators say.

Tax changes in Australia included a 40 percent tax on big miners' profits, a rise in compulsory employer superannuation contributions to 12 percent from the current 9 percent by 2019, and a cut in the corporate tax rate from 30 to 28 percent.

New Zealand's corporate tax rate is 30 percent and compulsory superannuation contributions stand at two percent.

Financial commentator Bernard Hickey said the change had "turbo charged" Australia's superannuation scheme.

"Many New Zealanders who have worked [in Australia] have money in the superannuation scheme and they love it because it gives them some savings, whereas in New Zealand they probably don't have savings," he told the New Zealand Herald.

The increase would also spark debate about whether KiwiSaver should be compulsory, he said.

Mercer New Zealand chief executive Martin Lewington said New Zealand would fall further behind Australia's workplace savings.

"The fact remains that New Zealand's population is ageing as quickly as Australia's, and in fact the potential cost per capita of funding an ageing population in New Zealand may be greater due to our Government-provided pension being available to all New Zealanders no matter what their income or savings base."

Council of Trade Unions economist Bill Rosenberg said the Australian superannuation move would attract more New Zealand workers to Australia and boost funds for investment in its economy.

Rather than a knee-jerk "must match Australia" response, New Zealand needed to look deeper.

Deloitte managing tax partner Thomas Pippos said superannuation was only one factor influencing New Zealanders to move to Australia.

Business New Zealand chief executive Phil O'Reilly said the change 30 percent to 28 percent over four years is a relatively modest reduction in the company tax rate so matching it "should be relatively achievable for us".

"Business in New Zealand will be expecting our government to make and communicate an early decision on when we will drop our company rate below 28 percent," he said.

Michael Barnett, head of the Auckland Chamber of Commerce, said that for New Zealand to be competitive with Australia long-term, the trans-Tasman tax system needed to be closely aligned.

The changes to the Australian tax system announced at the weekend put pressure on the Government's budget, due on May 20, to support business.

Finance Minister Bill English has said he would not pre-empt the budget.

However, he said it was important New Zealand's tax system remained competitive with other countries, particularly Australia.

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