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

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