ACT's plan for a tax cut for every earner
- Provide a tax cut to every earner
- Implement a flatter, fairer and simpler tax system
- Simplify the tax system for individuals and business and boost economic growth by reducing harmful taxes
- Fund our plan by reducing wasteful and unnecessary government spending.
In the long-run, we hope to move New Zealand to a single, low, flat tax rate. This proposal is our transition plan.
Our plan, in detail:
• 10 percent on income under $14,000 (down from 10.5%)
• 15 percent on income between $14,000 and $48,000 (down from 17.5%)
• 25 percent on income above $48,000 (down from 30% and 33%)
• 25 percent company tax rate (down from 28%).
This plan will have no impact on the quality of core government services, e.g., in health and education. Instead, it will be funded entirely by cutting wasteful and unnecessary spending and returning unspent money to taxpayers. We have costed our plan conservatively, not taking into account the likely behavioural response, where increased incentives to work and invest mean higher-than-forecast revenues in the long-run.
Our personal income tax cuts, according to the Treasury's revenue data, will return $5.6bn to the pockets of hard-working taxpayers. The company tax cuts will return $1.7bn to entrepreneurs to invest.
That total fiscal cost, of $7.2bn, will be covered by cancelling fees-free tertiary education, the Provincial Growth Fund and the Winter Energy Payments ($1.8bn), increasing the age of superannuation to 67 ($0.4bn), capping Working for Families ($0.6bn), abolishing KiwiSaver subsidies ($1bn), and returning unspent surpluses to taxpayers ($3.4bn).
What it means for New Zealand
New Zealand is a pioneering society. Each one of us or our ancestors moved here for a better life. We did not move here to be socially engineered by politicians and we are not served by an overly complicated taxation system that sends the wrong message about working, saving and investing. ACT's tax reforms would promote a culture of achievement and aspiration. It would make New Zealand a magnet for investment and raise productivity for New Zealand workers. Having the political courage to promote such a policy is one of the most powerful things New Zealand could do to secure a prosperous future in the 21st century.