SPEECH TO ACT NEW ZEALAND TAX POLICY LAUNCH Outside Hamilton IRD Office HAMILTON 11.00am Wednesday 3rd November 1999

Positive change in our tax system will mean positive change in our economy and increase the standard of living for every New Zealander.

More importantly releasing the economy from high tax will deliver, with certainty, the security and prosperity which New Zealanders are seeking in this election, 80,000 new jobs, balanced books while maintaining government spending at present levels.

The ACT Party has come to Hamilton today because the Hamilton IRD office is the most notorious in the country.

The Hamilton IRD office is rated, by accountants and tax specialists, as the most difficult in the country deal with.

Rodney Hide’s new book “The Power to Destroy” lists cases such as Ron Denby and Ralph Faulkner, New Zealanders whose lives have been destroyed by the IRD.

But I want to say here - blame the politicians.

The IRD has never been asked to collect so much tax. When Norman Kirk was Prime Minister, the IRD just had to collect one dollar in four.

Now the IRD is asked to collect more than one dollar in three of every dollar earned. As one adult in three is on state assistance, the reality is that producers in society pay over fifty per cent of all they earn.

To collect that much income Parliament has given police powers to the IRD, the power to seize bank accounts and, in the 1990's, imposed penalty interest rates that would make a loan shark blush..

The tax system has become a legal nightmare.

ACT’s tax proposals will a make a positive change and enable a fairer, simpler tax system. It will enable the IRD to become, again, a department that is known to be fair.

ACT proposes a flat tax of 20 cents in the dollar. We propose a timetable of tax cuts to reach the 20-cent rate within five years leaving all agreed spending in place. ACT’s proposal is a fairer system.

No one will be worse off because ACT will retain the low income tax rate of 15 cents.

The top rate of tax will be 20 cents. Those on higher incomes will pay more tax because they earn more dollars but hard work, thrift and personal responsibility will not be penalised.

ACT supports flat tax because it will give New Zealand a real winning regional and global advantage.

Today New Zealanders are paying, in total, five per cent more of GDP in taxes than Australians.

Already in the last three years 61,000 New Zealanders left the country permanently. New Zealand companies are also leaving for Australia.

The Alliance/Labour increased taxes will export more jobs and companies.

National’s proposal of comparable tax with Australia will not stop the drift west.

ACT’s 20-cent rate will give New Zealand the sort of advantage that Ireland’s 10-cent corporate rate has given that country.

ACT’s tax proposals have been fully costed. ACT’s Finance Spokesman, Rodney Hide, is releasing the calculations based on Treasury forecasts. They are transparent, accurate and above all, achievable.

ACT is posting, on our website, the full costings of our tax proposals. We challenge other parties to do the same.

ACT’s proposals do not require any cuts to any government spending. Indeed ACT intends spending more money on law and order, parenting, and getting people off benefits and back to work by re-prioritising spending.

There is no shortage of waste in Government. ACT's Owen Jennings exposed this year that Government had spent $5 million of taxpayers money telling New Zealanders how many times they could use their driveways. ACT's Muriel Newman exposed the fact that Government was spending $10 million just to collect the broadcasting fee. Rodney Hide has shown the waste of taxpayers money in Parliament. ACT stopped the $100 million parliamentary palace.

ACT says every dollar of taxpayers money should be spent wisely. It's time to stop the waste and ACT will insist on quality spending.

Let me make this prediction, in January ACT released a fully costed plan that showed a three cent tax cut was immediately achievable - the country could afford it, the economy needed it and hard working New Zealanders deserved it. National is finally following ACT's lead. It won't be long before a National Government supported by ACT itself begins to debate ACT's new tax policy of a 20-cent flat rate.

ACT’s proposals will increase jobs. Over and above the 117,000 new jobs forecast by the Treasury, over a four-year period, a flat tax of 20 cents will create 80,000 new sustainable jobs. These 80,000 jobs will be taxpayers.

Infometrics estimates conservatively that ACT’s flat tax will add five per cent growth to the economy over the decade.

ACT is the only party with a workable solution to the problem of how to create new jobs and growth.

ENDS

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