Call to review Maori tax break
Mood of the Boardroom of the Boardroom Mood of the Boardroom Mood The preferential tax break for Maori enterprises should be reviewed say the country’s top chief executives.
Maori Authorities are currently subject to a 17.5 per cent tax rate which is intended as a general approximation of the average tax rate their members pay.
But 47 per cent of Herald Survey respondents say it’s time the Government revisit whether the preferential tax rate is still appropriate. A further 17 per cent say the tax rate should be revisited but only for the larger Maori Authorities. Just 22 per cent say the status quo should remain.
The largest Maori Authorities — as identified in the 2016 Deloitte Top 200 — include Ngai Tahu which sported $1.5 billion assets ($180 million Ebitda), Tainui, with $1.2b assets ($98.7m Ebitda,) and Ngati Whatua ki Orakei with $767m assets ($79.9m Ebidta).
Local Government Funding Agency chairman Craig Stobo said, “What a lazy condescending proxy tax for our members of Treaty Partners’ corporations!!! they are significant billion-dollar business currently paying “next to zero tax”. “And they definitely need to be”. But an energy sector chief countered: “Leave Maori Authorities where they are and focus on getting the nonMaori entities to the same level over the long-term.”
Other authorities in the Deloitte Maori Business Top 10 include Moana NZ ($524.5m assets); Tauhara North No 2 Trust ($330m assets); Parininihi ki Waitotara ($279m assets); Ngati Porou ($224m assets); Pukeroa Oruawhata ($182m assets); Te Wanaga o Aotearoa ($181m assets) and Atihau-Whanganui.
Currently, charities are exempt from income tax on the basis that any income they derive must be used for charitable purposes (the relief of poverty, advancement of education, advancement of religion or other purposes beneficial to the community).
CEOs were asked if they supported the continuation of this tax exemption in relation to active business income (as compared to passive in-
“Charities fill in the gap where Government can’t — that should be encouraged,” said an automotive chief. “Churches fill a massive gap in society in terms of giving people meaning.”
Added the EMA’s Kim Campbell: “The NGO sector makes an important contribution and in some respects does work here which in many other jurisdictions ends up being taxpayer funded.”
But there was significant disquiet over the tax breaks the Seventh Day Adventist Church-owned Sanitarium foods empire has long enjoyed.
“I will not purchase a product from Sanitarium as I believe they compete unfairly,” said an environmental firm boss.
An exporter added, “happy to support bone fide charities — not big businesses like Sanitarium.”
The major issue was boundary definition, according to several CEOs.
“The key focus should be the ringfencing of all income for charitable purposes and the justification of charitable purpose,” said Stobo.