“Labour’s claim that taxpayers would be worse off under ACT’s alternative budget is either financially illiterate or dishonest, because they ignored ACT’s generous tax cuts for working families,” says ACT Leader David Seymour.
“Labour’s claim that taxpayers would be worse off under ACT’s alternative budget is either financially illiterate or dishonest, because they ignored ACT’s generous tax cuts for working families,” says ACT Leader David Seymour.
“If Chris Hipkins wants to launch dishonest attacks against ACT, he should have the guts to do it himself, rather than getting Carmel Sepuloni and Kelvin Davis to do his dirty work for him.
“Labour start by saying someone earning the average wage of $78,000 would get less money if the age of superannuation increases, and less still with ACT’s targeted KiwiSaver subsidy going only to low-income earners. What they forgot to say is that under ACT, someone on that salary would pay $2,196 less income tax per year. Let’s run the numbers again.
“A thirty-year-old on that average wage would pay $2,196 less tax per year, that’s $81,265 less tax if they have the same income until they’re 67. That’s thanks to ACT’s tax policy of two rates, 17.5 and 30 per cent. ACT’s tax cuts dwarf the spending cuts Labour are on about because ACT would cut government waste, leaving every earner better off.
“$81,265 dwarfs any loss of two years super, which Labour put at $52,000. On that score, an average 30-year-old earner is better off with ACT.
“Labour’s next claim is that ACT’s policy of losing $521 maximum KiwiSaver contribution would cost someone $46,500 by the time they retire, allowing for compound interest. Well, let’s talk about compound interest.
“$52,000 in 37 years’ time is worth a lot less than $52,000 now, because you could earn a lot of interest if you had that money now. It seems Labour only count interest when it suits them. Are they financially illiterate, or dishonest?
“On the other hand, the main compound interest most people face is on their mortgage. Imagine a 30-year-old paying $1,500 a week on a $500,000 mortgage. They will pay $675,000 in interest by 2053 at 6.79 per cent, a reasonable two-year rate right now. If they put their $2,196 per week tax cut into fortnightly repayments, they would pay $560,000 interest, leaving them $115,000 better off.
“There is an important point here. While Labour have Treasury’s Debt Management Office borrowing money hand over fist to put into people’s KiwiSaver accounts, the real pressure many families face is their mortgage. Mortgage interest is often higher than KiwiSaver returns, so they are going backwards, as is the Government’s accounts.
“Of course, there are many variables this model doesn’t consider. Mortgage rates will change. People get more skills and experience so they earn more over time (saving even more from ACT’s tax cuts). Most people live in households with multiple incomes. It all goes to show how basic and silly Labour’s attack is.
“However, Kelvin Davis did say something this morning that was undeniably true: '[ACT's] value system is the antithesis of ours.' He's right. Labour wants to keep New Zealanders dependent on them - taking your taxes quietly and giving them back loudly. ACT says it's your money and you should keep more of it.
“What’s clear is that cutting government waste, simplifying taxes, and targeting subsidies leaves all people better off over time. That is why ACT is the most credible party on easing the cost of living and growing New Zealanders’ wealth. Labour, on the other hand, are either financially illiterate or dishonest.”