127.
I propose to introduce these new concessions with
effect from the year of assessment commencing 1 April 1987. The
first occasion on which they will apply, therefore, will be to
provisional and final salaries tax assessments for the fiscal
Personal Assessments.
I
year 1987-88, and also to 1987-88
estimate that the cost to the revenue in 1987-88 will be about
$470 million, and for a full year, $650 million.
Profits Tax
128.
As to profits tax, I propose a reduction in the rate of
tax on corporate profits from 18 1/2% to 18%. The cost of the
reduction proposed is $135 million in 1987-88 and, for a full year, $310 million.
The new corporate rate of 18% will apply to
provisional and final assessments for 1987-88.
129.
I do not
I am aware that some have argued for a more substantial
cut in the rate of corporate profits tax on the ground that this
would provide a stimulus to the business sector.
consider that we should move too sharply at this stage. But I
hope that this clear indication of the direction in which I
would like to move will provide, if not a stimulus to the corporate sector, then at least sound reason for confidence that
we remain determined to maintain a low tax regime in
in which
business can flourish. Gentle progress will serve us best.
Reduction in Standard Rate
130.
The reduction proposed in the standard rate will affect
the amount of profits tax to be paid by unincorporated businesses, and reduce yields from property tax and interest
tax. Taken together, I estimate this will cost a further
$35 million in 1987-88 and $75 million in a full year. The new
standard rate will apply to provisional and final assessments
for 1987-88 on unincorporated businesses, to provisional and
final assessments for 1987-88 in respect of property tax, and
also to final interest tax assessments for that year.
40
/Estate
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