“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.
“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.”