Prime Minister John Key says it would set a dangerous precedent to give tax breaks to try to get companies to retain jobs in New Zealand.
Norwegian company Norske Skog on Monday told about 300 employees that it is shutting down of its two printing machines at its mill in Kawerau.
It is not yet clear how many jobs will be axed, but the Pulp and Paper Workers' Union says 120 jobs were cut the last time a machine was shut down in 2006.
Mr Key is rejecting any possibility of tax breaks to try to encourage Norske Skog to keep workers on.
"It would be a dangerous precedent for us to start saying we are going to support a particular industry over another when there's change.
"If you want to roll that all the way back, we'd still be producing cars in New Zealand, and that probably wouldn't be in New Zealand's best interests."