No New Taxes
National has promised no new taxes in its first term and to repeal the Auckland regional fuel tax and any capital gains
tax. While this should be welcomed, we’ve been here before. New Zealanders were promised no new taxes by Steven Joyce
during the 2014 election campaign, and then got the bright line test/capital gains tax, a border tax, a Netflix tax, and
higher cigarette taxes. It also begs the question…
What Happened to Cutting Taxes?
Such a policy will simply return New Zealand to the status quo that existed on election night 2017. It’s not ambitious
enough – we should be seeking to reduce the tax burden on hardworking Kiwis. It also ignores taxes that might be
legislated for prior to 2020 and other stealthy taxes that are creeping up on Kiwis.
Tax Working Group
What could Michael Cullen’s Tax Working Group throw up prior to 2020? Cullen reckons our tax system relies on too narrow
a range of taxes and isn’t progressive enough. This will be news to the top 10 per cent of households who pay about 37
per cent of all income tax. It will also come as a shock to those who pay income tax, company tax, GST, petrol tax,
alcohol tax and tobacco tax. Cullen has publicly spoken about eight new taxes or types of tax. Taxpayers could be in for
a capital gains tax, a sugar tax, a financial transaction tax, a wealth tax… ACT will be fighting the Government, and
defending taxpayers, every step of the way.
Petrol Taxes
The coalition’s increases to petrol excise will take a billion dollars out of the pockets of Kiwis over the next four
years. Fuel tax hits the poorest hardest – they live further from city centres and so drive more, and they are less
likely to have fuel efficient vehicles. Petrol taxes make up 28 per cent of the cost of a litre fuel. ACT would scrap
fuel taxes and introduce road pricing – a fairer and more efficient system. Other businesses adjust pricing in times of
shortage to shift demand toward times of surplus. With GPS technology, we can adjust pricing of specific routes in real
time using prices and ensure consistent availability of road space. Road pricing has reduced traffic flows by up to 20
per cent in London, Singapore and Stockholm. It will make public transport faster and more attractive.
Bracket Creep
Bracket creep is an invisible tax that has been ignored by our Finance Ministers. Households that see their incomes rise
at the level of inflation are dragged into higher tax brackets, meaning they pay more tax but their purchasing power
falls. As a result of inflation and the inaction of governments, the average income earner will eventually pay the top
tax rate in 2022. The previous government took an extra $2.1 billion from the taxpayer between 2011 and 2017, costing
the average household $2500. ACT would index tax brackets to inflation. Earlier this year, David Seymour tabled an
amendment that would have achieved just that, but Finance Minister Grant Robertson refused to adopt it.
Tobacco Taxes
Tax increases of 10 per cent plus CPI are set to hit smokers on 1 January 2019 and 2020. The amount of tobacco excise
collected by the government will rise to $2.2 billion by 2021. We’re told it is the best way to deter people from
smoking, but it isn’t working. Smoking rates have flatlined over the past few years. The Government could halt further
tax increases and encourage people to take up vaping. Instead, it will continue to take millions out of the pockets of
the poorest New Zealanders. It has also decided to regulate vaping – a relatively safe alternative – just as heavily as
smoking, meaning fewer Kiwis will switch over. ACT would scrap any further increases to tobacco excise.
A Tax Cut for Every Worker
ACT’s plan is to deliver a tax cut for every working New Zealander. That means a top rate of 10 per cent for those
earning up to $14,000. Workers on between $14,000 and $48,000 will pay no more than 15 per cent, down from 17.5 per
cent. A person on the full-time minimum wage will keep an additional $500. New Zealanders earning more than $48,000 will
pay no more than 25 per cent. A worker on the average wage will hold on to about $1,500 more each year. These tax cuts
are fully costed and will be funded through the Government’s $5.5 billion surplus.
Firing Up the Engine Room
Small and medium-sized businesses are the engine room of our economy. ACT would cut company tax from 28 to 25 per cent
so businesses can grow and create new jobs. We would make $1.1 billion in cuts to corporate welfare to fund these tax
cuts. Rather than Labour, NZ First and National’s corporate welfare handouts to politically-connected businesses, the
simplest thing the Government can do to support business growth is to cut company taxes. Reducing the tax burden on all
companies will enable them to grow, take on new staff, and pay higher wages.