Company tax rate issues – review of Secretariat modelling: Discussion Paper for Session 14 of the Tax Working Group

In Session 6 a Business Tax Paper was presented which considered the pros and cons of a cut to the company tax rate.  In Session 8 we provided further information on the theory of a company tax cut in a small open economy and modelling results.  We discussed both the Australian Treasury’s modelling of company tax rate reductions and the Secretariat’s preliminary modelling of the effects of company tax rate reductions in New Zealand.  We mentioned at the time that we were putting out our modelling for external review.  Professor Norman Gemmell (Chair of Public Finance at Victoria University) has reviewed the modelling as well as papers that have gone to the Tax Working Group.  The aim of this note is to let the Tax Working Group know the results of the review.