Alliance tax favours pensioners, beneficiaries, 75% of Kiwis

The Alliance wants to restore a fair tax system based on ability to pay. Alliance tax expert Professor Jim Flynn says under the Alliance policy, the first $10,000 of income will be tax free. This applies to everyone, but it would most benefit those on low incomes, including pensioners and beneficiaries.

"At present, Kiwis pay $1530 on their first $10,000. So this amounts to a new deal for pensioners and beneficiaries.”

Professor Flynn says the proposal is the kind of progressive tax system that existed in New Zealand before Labour and National decided to benefit the rich and attack the most vulnerable.

Under the Alliance tax policy, almost a million Kiwis who earn between $10,000 and $20,000 would average $1380 less tax than they do now. Another 670,000 would enjoy substantial tax breaks. Those on $25,000 would pay $980 less and those on $35,000 would pay $300 less.

"The Alliance would reduce income tax for the 75% of New Zealanders who make less than $41,000 a year. This refers to individual income, so a family with two earners who each make $41,000 would pay no more tax,” Professor Flynn says. Alliance marginal tax rates increase from 40 cents in the dollar after $40,000 up to 54 cents in the dollar for income over $100,000. This represents a significant redistribution of wealth.

“Up to $50,000 this has little impact. But the 85,000 Kiwis who make more than $100,000 a year would, rightly, bear a much greater burden. Someone on $200,000 a year would pay an extra $18,460 in tax,” Professor Flynn says.

Taxes raised in the Alliance proposal would fund free tertiary education, universal student allowances, abolition of school fees, state housing, and a universal child benefit of $15 per week. [ www.alliance.org.nz ]

"The $1.1 billion for these policies would come from higher taxes on casino profits, a carbon tax, restoring the land tax abolished in 1992, and inheritance taxes at 20 cents in the dollar beginning at $500,000," says Professor Flynn.

The Alliance would also treat 1.3% of total taxable income as a dedicated “KiwiCare” health levy, which would add around $1 billion to the projected health vote. Over the next six years, the money would come from the Superfund and after that, from Government surpluses no longer invested in that fund.

“This would allow for free doctor visits, no prescription charges, reduced waiting lists, and meeting urgent needs in mental health, aged care, and disabilities. It would provide free hearing and eye tests and free dental check-ups,” Professor Flynn says.

The Alliance would gradually replace GST, starting with essentials such as food, and put in its place a financial transactions tax (FTT) at the low rate of 2 cents per $100. “The FTT would be charged on withdrawals only, not deposits. If you spent $26,000 per year and withdrew a weekly total of $500, FTT would be 10 cents. Compare that to GST on a family's weekly food bill - 12.5% of $160 or $20 a week.”

Professor Flynn says Alliance policy can be put in one sentence: “A fair tax system pays for a future in which New Zealanders are healthy, well educated, well housed, and in work.”

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