Newman Online

This week, Newman Online looks at Labour’s wasted opportunity to deliver hard-working Kiwis a tax cut in the Budget, and investigates what benefits ACT’s low tax policy would bring New Zealand.

Just as predicted, Finance Minister Michael Cullen, sitting on a tax surplus of $7,400,000,000, said in his Budget speech that Labour couldn’t afford to give working families a tax cut. Instead, to counter the mounting call for tax cuts, he announced that a three-yearly increase in income tax thresholds would be introduced, although not until 2008. This measure, which would increase the pay packets of those earning up to $38,000 by the price of a packet of chewing gum, is an insult to hard working taxpayers.

What is even more pathetic is that taxpayers, who are being grossly over-taxed by this Labour administration, will be forced to wait for another three years for what amounts to tax relief crumbs. What is even worse is that Labour has gleefully announced that they intend to introduce a new carbon tax in 2007 to pay for it!

This new tax comes on top of the 33 other tax increases - on everything from sherry to fishing licenses, fire service levies to petrol - that Labour has introduced since its 1999 election promise to voters that they would not increase taxes “for the 95 percent of taxpayers earning under $60,000 a year”. Yeah, right!

Labour’s whole greedy tax system amounts to nothing more than daylight robbery! Over the next four years, they expect to collect $21 billion in tax surpluses, with the $6.7 billion forecast for next year alone amounting to $4,000 for each Kiwi household.

It is ACT’s view that New Zealand families desperately need tax relief. We believe that Labour has disempowered working families by wringing every last drop of tax out of them. In its arrogant belief that it knows better than individuals how to spend their hard-earned money, Labour has ignored the very real challenges and costs of bringing up children, finding the money for education and health charges, paying the rent or mortgage, and trying to save.

Not only that, but the basic premise that income re-distribution - a founding principle of this Clark-led Labour administration – results in national wealth creation is wrong. It didn’t work for the Soviet Union and it will not work for New Zealand!

Imagine how different our collective reaction to this budget would have been if ACT’s visionary tax cut proposal had been introduced. Under ACT’s tax plan, anyone earning up to $38,000 would pay only 15 cents in the dollar tax. Everyone earning over that would be taxed at 25 cents in the dollar. Businesses would pay 25 cents in the dollar as well.

The effect of such a change would be electric. Families would immediately have the benefit of the equivalent of an average seven percent wage rise, and Kiwi businesses would gain a significant competitive advantage.

But that would only be a start. The dynamic effect of such a tax cut would drive job creation, productivity increases and real economic growth. It would lift our standard of living in a sustainable way and begin to close the growing wage gap, not only with Australia but with other developed countries as well.

The effects would reverberate around the world. And most importantly, it would send out a clarion call to Kiwis living abroad to come back home!

Most New Zealanders who leave our country permanently do so because of better work opportunities abroad. They find more exciting jobs that produce rewards far in excess of anything this country can offer. But once a Kiwi always a Kiwi; and for many New Zealand nationals living overseas, the heartache they feel for this great little country of ours is palpable.

And that’s not to mention the emotional distress of their families who wish they were back. Sure, parents put on a brave face as they enjoy occasional visits with children and grandchildren, and welcome regular calls and emails, but there is always a deep-seated longing to have their family safely back home.

Some 250,000 New Zealanders have left the country since Labour has been in office, 125,000 of them permanently. Too many good Kiwis have had enough and are voting with their feet. Others have been holding out for the Budget and hoping that Labour would finally understand that families deserve a fair go in New Zealand through a less punishing tax regime. So while some 600 Kiwis a week are moving to Australia, as a result of yesterday’s insulting chewing gum budget, many more are expected to go.

Yesterday’s budget signaled that tax cuts will be an election issue. In contrast to Labour’s agenda, which has cemented in the exporting of successful New Zealanders, ACT’s low tax plan could have signaled the start of a ‘bring ‘em home’ campaign.

In light of the extreme disillusionment of the public to the Budget and to the Labour Party, which is clearly out of touch, ACT Leader Rodney Hide launched a parliamentary petition today to ask that the Government to return the surpluses to hard working New Zealanders. With a recent NBR poll showing 62 percent of Kiwis want a tax cut, the petition will no doubt be enthusiastically received.

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