Frankly speaking, if you have a surplus of $10bn sloshing around it means you taxed the people too hard.
Prime Minister John Key is hinting at bigger than expected budget surpluses in the next few years which would allow the government to cut taxes despite the cost of the earthquake.
He says the quake is likely to cost between $2 billion and $3b and the government also expects to increase spending on health and education.
“Over the eight years we’ve been in government, while there was the big tax switch in 2010 there hasn’t been a significant reduction in people’s taxes,” Mr Key said at his post-cabinet press conference on Monday.
“I’m not arguing this is going to be significant as in a massive tax cut, but I am saying that I think there is an argument around a tax and family package that sits alongside a lot of other expenditure.”
Mr Key said Finance Minister Bill English had briefed cabinet on next week’s half-year economic and fiscal update.
“When you see the numbers, what you will see is the budget surplus getting quite big,” he said.
A surplus means choices. Labour will spend the lot, they always do. They lock in spending with things like Working For Families, spend the lot and then when a recession hits demand entitlements remain.
So, what John Key needs to do is deliver some more tax relief to those who actually pay the tax.
Secondly, retire some debt.
And thirdly, work out a way to pay teachers, cops, fireys and nurses some more.
Tax cuts do lead to an increase in tax revenue so if he is smart all of that is possible.
If John Key does ALL of that, then a fifth term is on the cards, before he has even won his fourth.
– NZ Newswire