Friday, 20 May 2005

United Future Fingers All Over Budget Financials

Gordon Copeland, United Future Finance and Revenue spokesperson, has revealed that many of the tax and financial elements in the Budget relate to his party's bids made to the Minister of Finance.

1. United Future Bid

That the tax brackets be adjusted to offset the effects of inflation since 1 April 2000.

Government Response

Tax brackets to be adjusted on 1 April 2008 for inflation between now and then and then at three yearly intervals thereafter.

2. United Future Bid

That earnings on superannuation funds be taxed at the marginal tax rate of the saver.

Government Response

Accepted.

3. United Future Bid

That capital gains tax on domestic share investments through managed funds be abolished.

Government Response

Accepted.

4. United Future Bid

That the amount of petroleum excise duty diverted into the Crown Account be reduced by five cents per litre.

Government Response

For the three years to 30 June 2009, a further $100 million a year will be diverted to the National Land Transport Fund.

5. United Future Bid

That workplace savings schemes allow savers to make a withdrawal to purchase a first home and that their contributions be tax free.

Government Response

A $1,000 up front contribution and the ability to withdraw all funds deposited plus a subsidy of up to $5,000 per saver to purchase a first home.

6. United Future Bid

That GST be removed from rates.

Government Response

Declined, but a rates rebate scheme for 150,000 superannuitant households introduced.

7. United Future Bid

That the tax rebate level for charities be increased from $630 per annum to $5,000 per annum and that company imputation credits be extended to registered charities.

Government Response

Declined

In summary, of the seven United Future bids in the tax and financial area, the Government picked up on six (in whole or in part) and declined one.

In all, the United Future bids acted on will yield annual savings to taxpayers of $566 million per annum.

In addition, although the delay in implementing the tax thresholds, and then only in part, can be characterised as "too little too late" it is an historic breakthrough. Never before has a Finance Minister committed to a regular adjustment to offset inflation.

The fundamental unfairness of fiscal drag has been pointed out by many people since the days when Rob Muldoon cynically used high inflation rates to boost his coffers at the expense of taxpayers. Yet, not until United Future joined the ranks in Parliament, has this legalised rort been brought to an end.

Not bad for a party of 8 MP's!

Table of Taxpayer Savings

$million per annum
Adjusting tax brackets for inflation
366
Adoption of marginal tax rates for superannuation savers
25
Removal of capital gains tax on sale of domestic shares
100
Rebates on rates
75

Total
566

Plus: $300 million diversion to National Land Transport Fund

ENDS

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