Thursday, 19 May 2022

Brain Drain Budget taxes Kiwis hardest, ACT gives relief


“Labour must have missed the story of the golden goose, or maybe they just think it doesn’t apply to Kiwis. A key part of the Brain Drain Budget is too much tax on productive people,” says ACT’s Associate Finance spokesperson Damien Smith.

“Households are facing a cost of living crisis, squeezed from every direction, but the rising cost that many people don’t see is tax. Under this Budget, the amount of tax per person is up to $21,945, from $15,825 when Labour took office only four years ago.

“If you are weighing up New Zealand and Australia as a place to work, save, and invest, the fact is they tax you less. In fact, the most recent complete figures from OECD show that New Zealand is the highest-taxed high-income Pacific economy. The Government takes 30.4 per cent of the economy in taxes. That means our government takes a bigger chunk of our economy in taxes that those of Australia (27.7), South Korea (27.4), and Singapore (13.3).

“ACT’s Alternative Budget for Real Change would simplify our six-rate tax system down to a two-rate system. It would be simpler to administer (sorry tax accountants), more competitive (sorry Australia), and send a message that if you work harder you keep more of your own money (sorry tall poppy syndrome).

Under ACT’s Alternative Budget for Real Change, the squeezed middle would be much better off. Here are some examples:

  • A Nurse on $70,033, about the middle of the range for a nurse, with one child would be $2,309 better off because of tax cuts and a payment ACT’s Carbon Tax Refund
  • A family with one average full-time salary of $73,000, a part time worker earning $30,000, and two children would be $2,802 better off under ACT’s Alternative Budget for Real Change.
  • A nurse, teacher, or police officer near the beginning of their career earning $60,000 would be $785 better off per year.

“These are the squeezed middle who are battling rising costs of everything. These are the people who’ll find a better life offshore if we keep taking them for granted. To prevent this budget going down in history as the Brain Drain Budget, ACT’s Alternative Budget for Real Change would give real relief to people who depend on working to earn money and pay their bills.”