INDEPENDENT NEWS

Brash - Getting ahead with National

Published: Mon 22 Aug 2005 12:38 AM
Don Brash MP - National Party Leader
22 August 2005
Getting ahead with National
National Party Leader Don Brash has unveiled a plan to significantly restructure the tax system, providing fair tax relief and targeted family assistance worth about $3.9 billion by the third year.
"This tax package substantially reduces the tax rate faced by ordinary New Zealanders who work a little harder, or do some extra overtime. It is a package designed to allow people to get ahead from their own efforts," said Dr Brash in announcing the comprehensive package in Auckland.
The features of National's fair tax plan include:
* The 15% tax rate, which now applies to income below $9,500 will extend to $12,500.
* For income between $12,500 and $50,000, the tax rate will be 19%.
* The withholding tax rate for secondary employment will be 19%.
* Income between $50,000 and $100,000 will be taxed at 33%.
* Income above $100,000 will continue to be taxed at 39%.
* The lower statutory rate of withholding tax applied to interest and other investment income will be reduced from 19.5% to 18%.
* The threshold for abatement of WFF payments will be $30,000 from April 2006, and to keep the effective tax rate on extra income low, the abatement rate will be 20%.
* The company tax rate will be reduced to 30% in April 2008.
* The personal tax reductions will be implemented in two stages in April 2006 and April 2007.
"These changes will give very large reductions in the tax rate on extra work and income faced by around half a million working New Zealanders, and a significant income boost for most working people."
In addition, National will not introduce Labour's planned carbon tax. That will save the average household at least $200 per year from 2007.
"Under this tax structure, a person on the average wage can work harder, do some overtime, or take secondary employment, and they will from next year keep more than $4 in every $5 they earn."
* Pushing the threshold for the 19% rate out to $50,000 will dramatically change the tax rate on extra work for around 300,000 working New Zealanders.
* The 39% top personal income tax rate will over eighteen months be shifted out to $100,000. That will lower the marginal rate from 39% to 33% for almost 200,000 taxpayers.
That means:
* A single person earning $38,000 will receive a $630 a year increase from April next year, rising to $690 a year from April 2007.
* Somebody earning $50,000 a year will get an annual increase of $1,470 from April next year, rising to $2,370 from April 2007.
Dr Brash also said over time National will replace Working For Families with a family tax package.
"Work will start immediately we assume office on replacing WFF with a system of family taxation. Nobody will be worse off from this change - we are comfortable with the level of support. But the method of delivery must change.
"During the interim period, a 20% abatement rate will be applied on top of our 19% rate out to $50,000. This will mean that even with income support abating, lower income earners will face an effective marginal tax rate no higher than the top rate of personal income tax of 39% (19% plus 20%)."
"Under Labour, those around the average wage and up to $60,000 of income will face a 53% effective marginal tax rate as their income support abates. Those earning over $60,000 will face a 59% tax rate."
* A two income family, with two young children, and a household income of $80,000 arising from two $40,000 incomes, will be $1,512 better off under National in the year starting April 2006, and $592 better off in the year starting April 2007. They will also save at least $200 a year by scrapping the carbon tax.
* If that family faced childcare expenses of $10,000 for two pre-school children, they could claim a refund of $3,300. Thus a hardworking couple on modest incomes would, with the maximum childcare deductibility, be $4,812 a year better off under National from April 2006, and $3,892 a year better off from April 2007.
* If they did some overtime, the tax on extra work would be 39% after abatement, not the 53% under Labour's package.
Superannuitants will also benefit from National's package, as the net superannuation payment is related to the after-tax average wage.
* Under National the annual net payment for a married couple receiving New Zealand Superannuation will increase by about $320 in April next year, rising by inflation to around $410 in April 2007, and then a further lagged increase from the tax cuts to around $560 from April 2008.
"For those with student loans, the tax cuts, together with deductibility of interest on those loans, will have a large impact on the ability to repay loans quickly.
"National's fair tax and families package provides a lower tax burden and restores the incentive to get ahead from your own efforts. It signals to hard-working New Zealanders that you too can share in the benefits of a growing economy," says Dr Brash.
To find out how you'll get ahead with National see our calculator on: www.national.org.nz
ENDS

Next in New Zealand politics

Wider Roll-out Of Cameras On Boats To Support Sustainability And Protect Marine Life
By: New Zealand Government
Plan For Vaccine Rollout For General Population Announced
By: New Zealand Government
New Zealand Not Immune From Rise In Antisemitism
By: Jewish Council
Nurses Reject DHB Offer And Confirm Strike Action
By: New Zealand Nurses Organisation
Greens Want Government To Get Cameras On Boats Faster
By: Green Party
Finally, Transparency At Sea - Cameras On Boats
By: Forest and Bird
No Dumping Policy Welcomed But Full Camera Rollout Needed To Deliver Ocean Protection, Says Greenpeace
By: Greenpeace
New National Booking System For COVID-19 Vaccine – Expert Reaction
By: Science Media Centre
DHBs Disappointed By Strike Action
By: All District Health Boards
View as: DESKTOP | MOBILE © Scoop Media