Mr Tizard explains
The man responsible for the introduction of the tax on computers in 1975 still thinks he was “absolutely right” in his decision. Mr R. .1. Tizard, the Labour member of Parliament for Otahuhu, was Minister of Finance when he introduced the 40 per cert tax on business machines along with taxes on other goods including long-playing records. “At the time, we had had discussions with the Federation of Labour about the general outline of a wage-tax agreement,” he said in an interview this month. “We discussed bringing down income tax over most awards.” This meant lower tax on average wages varying from about .$BO a week to more than $2OO a week, and was a complicated procedure. It meant a reduction in the total tax take of about. $l5O million. With overseas trade problems and inflation, the Government had decided that the loss in tax take would have to be made up by indirect taxes. Business machines were one section of goods singled out. In some types of this equipment there was a 10l of wasteful expenditure, said Mr Tizard. “Very flash copy machines not. much better than ones being used were being bought.” Machines still useful
were being made redundant. There were moves to have a dose correlation between sales tax and customs tariff, and this was one of the reasons that computers were hot exempted. Another was that unemployment was rising, and was starting to appear in clerical areas. The Government was in many cases subsidising industry and it did not seem logical to do this and to allow unemployment to be caused by business machinery. The computer industryhad made a “hell of a howl" about the tax. “It has the highest, pressure sales group in the world.” he said. But because of the 15 per cent inflation, and the internal and external deficits the Government was not going to allow increased import spending. A point that was not. considered at the time, but that. Mr Tizard now sees as a point in favour of introduction of the tax in 1975 was its effect on the “brain drain.” At that time, he believes, the Government was probably the only body in New Zealand training programmers in any number.' As soon as they were trained they were leaving and going into private industry, and i oven overseas. With the lure of higher i
overseas wages. there would probably have been a continual shortage of programmers and continuous, high training costs in New Zealand, “But the real aim was to get at machinery that was making obsolete stuff that was not obsolete at all.” Commenting on the C.W.F. Hamilton case of a computer's being used largely in manufacturing activity, Mr Tizard said that software had not been taxed, only machinery. The tax- had' not affected the programmer’s las'; of getting the most possible use from a computer.
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Press, 17 April 1979, Page 20
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480Mr Tizard explains Press, 17 April 1979, Page 20
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