Real Change In Tax, Not Minor Adjustments
“While the CTU attacks National for wanting Labour’s tax policy adjusted for inflation, ACT proposes real change. Our fully costed alternative budget for real change, proposed a flatter simpler more competitive tax structure that sets New Zealand up for long-term growth” says ACT Leader David Seymour.
“Tax bracket indexation is
simply Labour's policy adjusted for inflation. It’s not a
tax cut because the rates stay the same. It is freezing
Labour’s tax policy in time. Having six rates of tax on
income is not only complex and uncompetitive, it promotes
the wrong values. It is tall poppy syndrome in the tax
code.
“When our productivity growth is in the
tank, the median wage gap with Australia is nearing $25,000,
young people are leaving in droves, it’s time for real
change. ACT has a fully-costed tax plan that will deliver
it.
“ACT is the only party that has released a
fully costed Alternative
Budget. It shows how expenditures could be reduced by
$7.2 billion with measures including an end to corporate
welfare and returning the number of bureaucrats to the
47,000 Labour inherited. With this, we can afford
significant tax changes.
“2020-21 revenue data
shows how much of the tax burden is shouldered by so few
income taxpayers. In that year, nine per cent of income
taxpayers declaring over $100,000 earned 37 per cent of
declared income, and paid nearly half, 49 per cent of all
income tax. The new 39c tax rate did not apply in 2020-21,
it is possible that nine per cent of taxpayers declaring
over $100,000 are now paying more than half of all income
tax.
“Under ACT’s tax policy, those nine
per cent declaring over $100,000 in income tax would still
earn 37 per cent of declared income, and still pay more than
their fair share at 44 per cent of all income tax. The
difference is that all taxpayers would pay
less.
“People earning between $2,000 and $48,000
will get a Low and Middle Income Tax Offset of up to $800
that offsets the additional $980 in income tax. They will
also receive an additional $253 in carbon tax refunds for
every person in their household, leaving them better off
overall. ACT’s tax swap leaves everybody better
off.
“We would reduce the middle income tax
rate down from 30c to 17.5c in the first year. A nurse with
one child, for example, earning $70,000 would receive around
$2,300 in tax relief.
“Subsequent further tax
cuts, reducing the 33 per cent rate to align with the
Company Tax Rate of 28 per cent, would be implemented as
soon as inflationary and fiscal conditions permit.
Implementing them in Financial Year 2023/24 would allow a
Government following ACT’s budget to return to Surplus by
2024/25 on current forecasts.
“While
providing this essential relief to Kiwi households there
would still be $1.5 billion of new spending to pay good
teachers more, increase our defence spending to match
allies, and sharing GST on construction with local councils
to build more infrastructure.
“Successive
Labour and National Governments have made our tax system
more complex and less efficient – we now have six tax
rates. New Zealanders are overtaxed across the board and
tinkering at the edges with indexation won’t change that,
it will embed it.
“We need to put the values
of aspiration in our tax system, making it fairer, simpler
and more competitive. It’s not only possible, it’s
essential.”