Labour's Tertiary Lolly scramble released

[Imported from Whale Oil Beef Hooked on Blogger]

Labour released it’s Tertiary policy today announcing that all working New Zealanders are to subsidise the cost of student loans.

By not reducing taxes Labour has said that they have decided that people studying for tertiary education are more deserving than the ones paying the tax to fund this little debacle.

Using this logic the government should subsidise my mortgage interest as the house is an “investment” in my future and why shouldn’t Ma and Pa in Dannevirke help me pay it off.

But wait let’s do some math – if you earn $50k and National drop the 3% off the 33% rate and 2% off the 20% rate bottom tax brackets with their tax rebate on student interest then with a $20k loan (larger than average) students would be $1560 better off. Compare this to the $1400 labour is offering to write off. Thanks to “cap” for his comments on kiwiblog.

The difference is that I along with every other hard grafting, tax paying worker would also get a slice of the pie. With Labours policy only student get the benefit, every other Kiwi gets the bill.

Coming home in the car this was the overwhelming feedback on Talkback Radio. I don’t think that in the hour I was listening there was even one person calling in support of this policy. Callers ranged from parents of students, electricians, plumbers and small business owners.

I think Labour may have won the students but lost heartland New Zealand.

Update: Sir Humphrey’s take on all this. Enlightening reading.
Update 2: Cathy Odgers as per usual has a brutally frank dissertation on this policy, highlights below;

Lets list the groups of NZ voters this proposed policy will marginalise:
1. People who did not go to University and borrowed money for their small businesses. Where is their free money?
2. People who went to University and have paid off their loan in full including interest at approximately 7% for the entire duration of their loan. Where is their tax cut? They will be livid.
3. People who are funding student fees (other taxpayers) and do not get interest free loans for their small businesses.
4. Every expat New Zealander still living overseas. They will all be subject to the interest regime as a punishment for not living in NZ. It is an insult to all of us regardless of whether we had a loan or not.
5. Beneficiaries and low income earners who want to go overseas for a holiday and cannot afford to, yet students will use their interest free money no doubt to do very much the same.
6. First year graduates who will see their friends at University effectively have more disposable cash than they do as the first year graduate is subject to tax on their earnings.