18 May 2005
Greens urge Govt to set tax-free threshold
As speculation mounts that income tax cuts will be a feature of tomorrow's Budget, the Greens are urging Finance
Minister Michael Cullen to introduce a tax-free threshold, rather than lifting existing thresholds.
"We support income tax cuts but we want Kiwis on low incomes to get the most benefit rather than those of us who are
already relatively well-off," Green Co-Leader and Finance Spokesperson Rod Donald said.
The Green Party favours charging no tax at all on the first $5000 of income. The $2.5 billion cost of such a move would
be funded by a suite of eco-taxes, including the recently announced carbon tax. A tax-free threshold would be similar to
Australia's system, which charges no tax on the first $6000 of income.
"Making the first $5000 of income tax-free would put an extra $15 a week in everyone's pocket," Mr Donald said. "That's
much fairer than, for example, United Future's proposal which amounts to a gold coin donation ($1-$2 a week) for anyone
earning less than $38,000 but more than $20 a week for those earning over $60,000, such as MPs.
"Without doubt, the current thresholds are penalising hard-working middle-income earners, but simply lifting those
thresholds is not the best solution to reducing their tax burden. In fact, they would end up relatively worse off
compared to high-income earners than they are now.
"The Greens also want the Government to increase the minimum wage to $12 per hour to boost the incomes of the lowest
paid and reduce the fiscal cost of existing income support policies," Mr Donald said.
ENDS