Hands up who wants a tax cuts election?

Peter Wilson at NZ Newswire thinks that next year will be a tax cuts election.

Amid confusing statements from the government one thing is clear – National will campaign on tax cuts in next year’s election, says NZ Newswire’s political writer Peter Wilson.

The cuts will either have been announced in the 2017 budget, coming into effect in April 2018, or there will be a firm promise that they’ll be in the 2018 budget.

Those are safe predictions, unless there’s another international financial meltdown.

On Thursday last week, Finance Minister Bill English put them on the back burner.

Here’s what he said: “We don’t currently have an explicit provision for tax reduction in the fiscal forecasts.

“At this point, we’ve prioritised additional debt repayment over setting aside money in budget 2017 for tax cuts.

“However, we are still committed to cutting personal taxes over time, and will consider these – either in budget 2017 or after – as and when the fiscal situation improves.”

By saying they could be considered in budget 2017, he meant that by then he might be in a position to announce his future plans.

On Monday this week Prime Minister John Key said tax cuts could be in the 2017 budget, but he didn’t seem to think they would be. ¬†

“Decisions haven’t been made and I can’t give you a start date,” he said at his post-cabinet press conference.

“But the obvious options are potentially in the 2017 budget, or campaign on it.

Both those options mean a tax-cutting election campaign.

Key is being a bit of a weasel with those promises wafting through the ether.

There will be condition, no doubt, but National is going to push Labour into a position where it is going to have to justify no tax cuts or tax increases against Nationals promises of tax cuts.

I agree with David Seymour on this issue however…we should be having tax cuts now.

ACT’s David Seymour has a totally different take on this – he wants tax cuts now.

“Even a $3b tax cut in 2018 would barely cancel out the $2.1b cost of bracket creep since the last round of tax reforms,” he said.

“A more credible approach would be to cut tax now with a promise to adjust tax brackets with inflation rates.”

Bracket creep occurs when incomes increase and tax thresholds stay the same.

Gradually, more and more people move into higher tax brackets.

Seymour has worked out that taxpayers are $2.1b worse off because of it, and calls bracket creep “raising taxes by stealth”.

Governments are notoriously reluctant to adjust thresholds because it has the same effect as a tax cut – and means less revenue.

It also helps control inflation, because people have less money to spend.

Bracket creep is evil and debilitating.

Either way it is shaping up to be a tax cuts election.


– NZ Newswire


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  • Cadwallader

    I don’t want a tax cut. I want tax reform. I suggest leaving GST where it is and reducing all income tax to 15% for companies, trusts and individuals. The government would have no choice but to ditch the “nice to haves” and operate within a strict budget, as most of us do at home. This will cause the car-dwellers, militant maoris and others who’ve lost their souls to entitilitis to scream with frustration that their wobbly lifestyles are under permanent threat. National won’t do it, and Labour/Greens would do more or less the opposite.

    • Keyser Soze

      I’d like to see the introduction of a transaction tax and removal of GST and income tax altogether. Every single transaction regardless of how big or how small gets taxed. Pay someone? Taxed. Get paid? Taxed. Move money into NZ? Taxed. Move money out of NZ? Taxed. Buy a loaf of bread? Taxed. Buy a house? Taxed. Get some cash out? Taxed. Deposit some cash? Taxed. Every single transaction at the same rate with no exceptions – probably some fraction of a percent. Simple. Integrate collection into the banking system, and job done, shut down the IRD they’ll be obsolete.

      • Cadwallader

        A capital transfer tax is OK in principle but it is an impediment to trading internationally. I am not a supporter of the present regime which is haphazard and clunky but I think handing tax regulation/collection to the banks raises its own difficulties. ie Are the banks’ fees to be tax deductible? Will the costs of collection be met at every transaction or be absorbed amongst all tax-payers? A capital transfer tax will be included in prices and hence will generate a rise in prices and inflationary pressures. I recall a transaction tax was promoted by Social Credit in the 1980s but fell apart, not so much for the idea but due to it being proposed by the “funny money” people. The policies of Social Credit were regarded as mad 30 years ago but in the years since, due to absurd levels of government spending they’re beginning to look almost sane!

        • Wheninrome

          Technology makes a transaction tax more feasible, the only problem is with the non invoiced cashie job, an underground cashless society would emerge, barter card springs to mind.

        • Keyser Soze

          A transaction tax is only really viable with current levels of technology so I suspect the 80s one fell apart for practical reasons around collection. As far as collection costs I would suggest it simply becomes part of the banking regulations in NZ. Banks are basically given the message that if you want to do business here then this is what you have to do… It would then be up to banks to meet those requirements and cover their costs of business in what ever way keeps them competitive in the market.

          We really are talking pie in the sky though… There are way too many lawyers, accountants, economists, bankers and uber wealthy who would fight this type of regime to the death. You think the brexit / bremain debate is gonna get ugly, if this tax was on the cards it’d be an all out war!

      • MrHippo

        Does this just force a cash economy? This is an area where criminals are supposed to lurk (just look at the smoke screen justification by the European Central Bank of criminal activity as the reason for the demise of the EUR500 banknote) then wait as cash users legitimately minimising tax are then all accused of criminal activity…

        • Keyser Soze

          Not if there is no cash. NZ was pretty much the first country in the world to adopt EFTPOS so widely. It is but a matter of time before we are also used as an international test bed to go cashless. I suspect we’ll still have some form of electronic ‘cash’ – like an anonymous payment card so you can still buy something (eg that big rubber novelty item) without having it linked to you personally – of course that will still be subject to a transaction tax.

  • Mike Webber

    We had a tax cut election in 2008. $50 a week and a whole lot more each year. Tui time. Labour and National have increased tax as a percentage of GDP in every term of office. This is why our per capita income has gone from 6th in 1950 to 40th now, as total tax in that period has risen from 17% to 45%.

  • sandalwood789

    It’s long overdue that the government stopped *wasting* huge amounts of money.
    They should axe the Race Relations Office, Human Rights Office, Women’s Affairs and the Children’s Commission. They should also massively cut back local government spending – that’s an area that the government hasn’t even **looked at**, let alone touched.

    All told, at least a billion dollars per year are still being wasted.

    • contractor

      Govt is breeching my Human Rights by not having a Blokes Affairs Office.
      Scrap HR, it is a complete waste and farce.

  • Tom

    Yes and my personal preference would be “first $12,000 tax free. That would take many beneficiaries out of the system. It always struck me dumb to have one group giving money and the IRD taking it away. In the UK the first $22,000 is tax free. Just think of the bureaucrats that saves.

    • Keyser Soze

      Also, has the nice effect of not taxing kids doing after school jobs.

  • gander

    Bracket creep is evil and debilitating.

    I reckon there’s another side to this argument.

    Bracket creep could help keep top marginal income tax rates down. The more people who join the rich ***** tax band, the less tolerance for punitive income tax rates.

    Conversely, if middle income earners are always insulated from the top marginal rate by bracket indexation, it’s easier to say, “Sure we need to do/buy/subsidise that. Those rich ****** should pay for it.”

  • rua kenana

    Just wait to see if there’s the slightest chance that a non-National-led coalition just might make some headway before the 2017 election. Unlikely though that may seem now.
    If that happens, tax cut offers to the electorate will be really on the table for next year’s budget.
    Otherwise, all politicians like spending other people’s money far too much.

  • Brian Dingwall

    Is the right time for a tax cut during a housing boom?

    The additional investible resource thus available to the private sector will likely be used to bid up the prices of existing housing stock, as well as to create new homes.

    In theory we invest tax cuts more efficiently than government can in additional consumption, as well as in R&D, human capital, machinery, sustainable enterprise, new services, innovation, and so on. This improves all our lot.

    While its always the right time for a tax cut in principle, in practice I would like to see the housing supply demand balance resolved first, lest the present boom be further fueled….

  • Miss Phit

    To be honest the cost of a packet of gum wont make or break me so Im not fussed.

    However having said that if the bracket creep was sorted that would do me for perking up my interest in one or another party.

    Hint Hint JK and Co.

  • contractor

    I dislike bracket creep too, hence part of my disdain for Clark and Cullen’s 9 years of that. I’d like to see govt debt brought down to 20% through cutting needless spending in nefarious areas.

  • Elmwood

    It was Karl Marx who said the best way to get rid of the middle class was to have a progressive tax system and inflation, so they all end up in the highest tax bracket. It works.

  • Mark

    At the moment I just don’t trust National,it is unlikely that I will vote for them,I will probably vote for ACT,but for now I am still in the “Not Voting” block. Frankly I have more respect for Helen Clark’s Govt in having actually done stuff (even if I disapproved of the stuff).

    National has squandered the mandate they were given by voters.