17 Jan 2013

Union leader supports private equity tax clampdown

6:53 pm on 17 January 2013

A union leader says clamping down on tax loopholes could benefit the workers of firms owned by foreign investors.

The Government is considering restricting the amount of debt private equity investors can heap onto local companies in order to minimise their tax.

First Union general secretary Robert Reid says workers in media and waste management firms owned by foreign private equity have suffered in recent years.

He says the amount of debt loaded on to these firms has depressed profits and given their owners the cover to keep wages down.

"I would rather see signals sent out to foreign investors that if they come here, they invest in companies properly - they don't invest in highly-leveraged companies, they treat their workers properly.

"Those are much better signals which would do more for the New Zealand economy than worry about getting their investment."

Mr Reid is dismissive of concerns from the Employers and Manufacturers Association that the changes being considered could deter foreign investment.

He says as well as protecting the tax base, the changes would also mean there would be more earnings left over to pay workers.