I don’t want hints John, I want cuts

After Bill English cancelled promised tax cuts the PM is now making hints of tax cuts in election year.

Prime Minister John Key has signalled National will campaign in 2017 on a $3 billion package of tax cuts.

Last week Finance Minister Bill English ruled out offering tax cuts in this year’s Budget and said it was not currently in the plan for the 2017 Budget either, although that could alter.

Speaking to Mike Hosking on Newstalk ZB this morning, Mr Key said tax cuts had been ruled out in the short term because it was a choice of spending $1 billion on tax cuts “to deliver very small amounts” or spending that money on healthcare and other areas.

However, he signalled National was working on a more substantial package of cuts for 2017. “We are not ruling that out for 2017 or campaigning on it for a fourth term in 2017, but having a bigger one, to be blunt, than $1 billion.” Asked how much was needed to deliver meaningful tax cuts, he said: “$3 billion, I reckon.”

It sounds like it will be achieved by changing thresholds to counter fiscal drag.

While there was not enough in the Government books for that at present, he expected that to change as the surplus built up.

He said it was possible to put that to the voters without it being dismissed as pork barrel, saying at some point tax thresholds had to change to take account of increasing wages.

“The average income is going up and we think in a few years time the average income will be $68,000. Well, the top rate cuts in at $70,000. If you don’t adjust thresholds over time you get to a point where the average income earner is paying the top threshold.

That can’t be right.”

It would be right if Labour ever got in. They love socking people with increased taxes.

I can’t wait for Labour to oppose it.

 

– NZ Herald

 


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  • localnews

    So we really aren’t talking about tax cuts at all. We are acknowledging that under this national government fiscal drag has ensured that all of us have been socked with a tax increase, and we are considering doing something that might put us back in the situation we were in eight years ago.
    Disgraceful that the tax brackets aren’t automatically linked to inflation and the average wage

    • contractor

      I agree that tax brackets should in theory be linked to inflation however I also strongly prefer that the govt reduces its debt, which although quite low on a global comparison basis is a potential weak spot politically come election time.
      Comrades Clark and Cullen held the tax brackets fixed for nine years, over a time when inflation was much higher than the next to zero inflation now (excluding housing). They did not spend the additional income wisely and indeed doubled core govt spending in a mere five years which produced little of benefit to the country.
      By contrast National has controlled spending well and sensibly. So in balance I do not believe there is a strong case for tax cuts.

      • Anthony

        Tax brackets should be linked to inflation. Else what’s the point unless the end goal is flat tax.

  • shykiwibloke

    “Hey customer – I have overcharged you, but it’s not enough to be meaningful so I’ll keep it and spend it on something else for you.” – like many government statements sounds rediculous when you put it in the context of a private business.

  • Mark

    From the Govt that increased GST,yeah I won’t hold my breath…

  • axeman

    I hate paying taxes just like most of us but understand that is what is required to provide what we have. All I ask is that they spend it better. How can there be poverty when I drive through some of the low socioeconomic areas and see the amount of sky dishes up on houses. I don’t mind paying tax to take care of the elderly, sick and educate our kids this is the right thing to do. other forms of welfare should be paid in other forms other than cash.
    Here’s an idea, years ago when I first started work if you had private health insurance you got the of the premium deducted from your taxable income, i.e you did not pay tax on the amount of premium, but that has gone now. Yet I still self insure which means I’m less of a burden on the state yet I get no recognition of this in my tax.
    I am still a b big believer in consumption taxes, the more you consume the more you pay.

  • Lightseed

    i wonder when labour will start campaigning on their tax plans which once you start looking at greens and labour policy will mean dramatic tax increases.

  • johcar

    If John needs an easy way to fund his $3 billion tax cut plan, how about dropping WFF, so the dollars are more equitably distributed amongst the whole population….

    • contractor

      So, replace WFF with something that gives equal wealth distribution?
      From what I see on the ground the lot of low to middle income earners trying to responsibly raise a modest sized family is jolly tough. Long hours and challenges meeting the bills (ok ok a few beers included), nothing left for any savings including Kiwisaver ain’t no fun at all.

      • johcar

        That would surely become easier if everyone was paying less tax.

  • Toby

    to be honest, I’d sooner put the cuts on ice in order to start paying debt.
    for the couble of bucks a week I’d get in a tax cut, we would be better of getting on top of that debt.

    We don’t know when the next GFC is going to come along and its better to make hay while the sun shines.

    • XCIA

      Here’s the thing. We forgo tax relief to repay debt, then we get the Grande Coalition who are all things to all people and suddenly the few are paying much more through the nose for the many.

  • contractor

    As a capitalist at heart with also I hope a social conscience I’d prefer that any tax cuts be limited to raising the tax free bottom end of income to help the low paid and encourage them to work. We should not selfishly keep our heads in the sand over the real hardships and long hours of the low paid. Exorbitantly high housing costs make it much worse.

    We must not reduce tax intake if it results in under funding of critical services that lift the potential of lower socio-economic groups, such as bettering education results and methods (including charter schools). This is critical because we have a large and growing number of the population who have not been doing well for a long time including of course under Labour and earlier National govts.

    Those of us lucky to be more skilled (and of course hard working but plenty of low paid work long hours and diligently too) enough to earn decent income benefit often grandly from the economic and social system that enables us to prosper. So yes, we who earn more should pay more even although it is vastly more than our fair share.

    Those earning hundreds of thousands and millions a year can easily afford to continue to pay their present level of tax and do not need any tax reductions. They prosper very well thank from the system that they support financially, despite economic ups and downs.

    The likes of Mike Hosking and Act supporters claiming that tax is theft of what they have worked for is spurious and nothing but highly self-centred. Taxes support the system that makes his ilk extremely wealthy. The proof is that the poor remain poor while the rich are getting very much richer. Simply, they do not need that much.

  • rua kenana

    Someone has to pay for this government’s immigration program. And that was, more or less, the reason we we told we’d get no tax cuts this year.
    e.g. From Stuff 12 May 2016: “English said the extra spending this year was needed to meet the demand created by population growth, including strong migration.
    Next year promises to be no different, although it’s maybe politically sensible of Key to keep us all hanging in hope that the long-promised cuts might actually eventuate.
    But he and English have to pay somehow for the additional infrastructure needed for next year’s immigration, and also have some funds to set aside for some Northland bridges and other goodies in the next attempt to buy that electorate back.
    So I’m not holding my breath in anticipation of any significant tax cuts next year.

    • contractor

      It’s employers driving the longstanding Labour and National immigration programme because they cannot get enough staff from the local population, thanks to a solid economy! Hobson’s choice really.

      • Graham Pilgrim

        Agreed. My local car repair garage desperately needed good, qualified automotive technicians to work on quality European cars. In spite of advertising widely, and enlisting the help of the MTA, they could find no one suitable locally, (East Tamaki), and ended up importing three. One from Germany, and two from South Africa.

  • Uncle Bully

    I’d happily forego tax cuts if instead they spent it on:
    1. more cops
    2. another prison
    3. border bio-security
    4. endangered species conservation
    5. Puhoi – Wellsford highway

    • Wheninrome

      Agree with one proviso,
      As long as your endangered species conservation isn’t the Labour party or the Greens.

      • Uncle Bully

        My idea of conservation is for the benefit of endangered endemic species such as the Kiwi. Labour and Greens however, are both introduced pests.

        • Wheninrome

          So glad we are on the same wave length.

  • Wheninrome

    “What ever we say and do” – John Key is running rings around them, this is a wonderful headline as you say the labour party will have to have a say of some sort on this, Damned if they agree and damned if they don’t.

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