Good news, bad news

By Karen Mangnall

NEW Zealand’s July budget held

good and bad news for Pacific nations.

The bad news is that there’ll be no exceptions to the new company tax laws.

New Zealand companies will have to pay full tax rates on any profits on invest ments in the Pacific, whether the profits are repatriated or not.

Pacific countries, particularly Tonga

and the Cook Islands, are arguing the tax regime will be unfairly punitive to their economies. Tonga made a strong complaint at the pre-Forum regional trade committee and Cooks Prime Minis ter Geoffrey Henry raised the issue at the Forum itself.

New Zealand’s Ministry of External Relations and Trade apparently believes the tax disadvantages won’t be sufficient to dissuade a serious investor from put

ting money into Pacific ventures. Coun tries like Fiji with their special manufac

turing zones still provide enough incen

tives to outweigh paying tax on profits in New Zealand.

But South Pacific Trade Office direc tor Steve Houlihan says the tax regime will inevitably act as one more disincen tive for New Zealand companies to ven ture into the Pacific, with its small work forces and isolation.

The good news is that the New Zea land Government, after 10 years of lob bying from its self-governing territories, has agreed to pay half of an individual’s pension entitlement if that person lives outside the country for six months or longer each year.

Niue’s government representative in Auckland, Ikipa Togatule, says the pen sion pay-out is good news for Niue which is fighting to stem the tide of de population to New Zealand.

“Many of our retired folk are still very active and still have properties on Niue,” says Togatule. “If they can rely on a regular pension income, this will encour age them to move back to Niue.”

The pension announcement has also been welcomed by Western Samoa but the Cook Islands is less enthusiastic. The Cooks Government representative in Wellington, laveta Short, says his Gov ernment has always believed its people to be entitled to the full pension payout.

Although the budget announcement is a “step in the right direction”, Short says the Cooks Government will probably want to keep negotiating for a fuller payout. Short doesn’t believe a 50 per cent entitlement is going to be enough to make it worthwhile for retired Cook Islanders to move back to the islands.

“I think most of them will be financial ly better off here,” he says. “And most of them have been here for many years, their homes, friends and families are here so it will be very hard for them to pick up and move.” □