$47 a week
The Herald reports:
A National government would introduce tax cuts for average wage earners of around $47 a week by 2011, party leader John Key said today.
Details yet to come. This includes the tax cuts we got last week.
UPDATE:
- A tax rate of 12.5% on income to $14,000
- 21% on income from $14,000 to $48,000 (moves to $50,000 in 2010 and rate drops to 20% in 2011)
- 33% for income from $48,000 to $70,000
- 38% for income from $70,000 (dropping to 37% in 2010)
Around 80% of taxpayers will pay a top marginal rate of no more than 20%. Hence secondary tax rates will shift to 20% for most.
Also a Independent Earner rebate of $10 to $15 a week for people not getting a benefit, Working for Families, or NZ Super, who earn between $24,000 and $40,000.
The long-term ambition is a top tax rate of 33%, but this will depend on economic conditions improving.
KiwiSaver
National is going to change Kiwi Saver from a 4% employer/4% employee scheme. It is going to make it 2% employer/2% employee and if conditions permit then lift that to 3% employer/3% employee. Note these are just the statutory minimums – employees can still put in more than 2% and employers can agree to higher contributions also.
The current KiwiSaver scheme (which I have often blogged support for) was set too high at 4%/4%. It was soaking up money needed today. As proof it was set too high, consider this. A 25 year old today on the average wage who went into KiwiSaver would have a higher income when they retire (including NZ Super) than they would have had during their working life (on the average wage). Now it is just nuts to have people earning more in retirement than they did while working. The 2%/2% scheme still has the incentive for the employee, but 4%/4% is part of what led to the projection decade of deficits.
Overall Package
The overall package announced by National isn’t just fiscally neutral – it is in fact fiscally positive by $283 million over three years. A small first step towards ending the projected decade of deficits.
But the bigger picture is growing the economy to pull out of deficit. $283 million won’t do it by itself. Putting more money into people’s pockets, rather than forcing it into super schemes that are currently losing money, will help. And moving to a flatter tax rate at the top end will also help economic growth in the long run.
National is also pulling back on its infrastructure package from $4.5 billion over six years to $3.7 billion over six years. That combined with stuff such as cancelling the MFAt expensaion plans will see debt tracking no higher than the status quo.
National have responded to the economic and financial crisis with a credible package that takes account of world events and a plan for economic growth. What is Labour’s response? Are they really saying that they don’t need to change anything from what they announced six months ago? Surely not. Labour need to reveals its policies and plans – if they have one.
October 8th, 2008 at 12:40 pm
Interestingly, Stuff describes it as “$15 difference by 2011″. Talk about putting a negative spin on things
Oh, and they follow that up with “Nats want to reduce top rate to 33 per cent”.
I never think “Nats” is a very flattering description of the National Party.
October 8th, 2008 at 12:41 pm
$47? What can we do with $47?
Three times as much as we can with $15…
October 8th, 2008 at 12:47 pm
A focus on reducing taxation is all well and good (and overdue!!) but where’s the plan to increase the average wage from $43k to $50k, or $60k, or $100k ?
While it’s always possible to cite individual examples to the contrary, overall NZ continues it’s slide into global irrelevance so we’ll continue to see scrapping and clapping over a few tax dollars here and there.
October 8th, 2008 at 12:52 pm
Imagine how much higher they could be if the Nats showed some real balls, and took a chainsaw to the state sector..
October 8th, 2008 at 12:56 pm
Hurrah! National is offering a block of cheese on top of Labour’s tax cuts and are gutting Kiwisaver to pay for it!
October 8th, 2008 at 1:00 pm
…cutting the tax credit to employers… …an end to the research and development tax credit…
So much of it is redistribution of taxes from businesses to private individuals rather than a tax cut per se, when considered holistically? That is to say, it is no saving from efficiencies to state operations – just taking more from business. Talk about shuffling the numbers without any real action…
Somewhat disappointing, given the impending economic situation, that ‘the Nats’ couldn’t have been smarter with the cutting state expenditure (other than taking away tax credits from businesses)
October 8th, 2008 at 1:04 pm
Wow.
Look at the briefing papers to prove there is no borrowing to pay for it and how it outperforms Labour’s decade of despair.
52% at the last poll. 55% after the life means life and now probably 60% after THE MASTER PLAN.
October 8th, 2008 at 1:05 pm
Toms, at least it’s a block of cheese. I’d hardly describe myself as a National voter, but compared to the chewing gum tax cut (which was, of course, taken back) and the two pints cut I got this week, it’s a move in the right direction. Cutting tax rates is always good and at least National have looked into the costings and come up with a workable way to alleviate the effects of recession and higher prices. What are Labour doing?
October 8th, 2008 at 1:08 pm
It makes sense to me and it is great to see a concise and simplistic response from National as it sees this impending crisis for what it is. Great contrast to Labour who still ONLY has policies dated 2005 on their website, one month out from the election!
By the way, $47 pw is $2400 per year. or at $16, 150 1 kg blocks of cheese.
How much do you weigh Toms?
October 8th, 2008 at 1:11 pm
bearhunter:
If i may quote:
23 May 2008 “… But National Leader John Key says Labour’s cuts are like giving the average worker a family sized block of cheese and has dismissed the cuts”
Lucky cheese is falling in price I suppose.
And the thing is they are going to gut kiwisaver to pay for this block of cheese. Check out what Brian Gaynor thinks of the Tories handling of savings schemes:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10465138&pnum=0
if anything demonstrates the the short termism greed of the thinking in the National Party, it is this.
October 8th, 2008 at 1:11 pm
“What are Labour doing?” ?
Well, having cleared out the cupboard, and left a tatty ‘IOU $510 Billion’ note for the people, they are now reduced to smearing the opposition, in lieu of having any policies to show us, with the election a mere 4 weeks away.
On the bright-side, we can still stump up the cash for a private jet-service for Helen to electioneer with, while the opposition MP is hamstrung by a draconian limit on what he dares spend to present the policies he actually does have.
October 8th, 2008 at 1:17 pm
Big cheese eater are we toms?
Surender monkey much?
October 8th, 2008 at 1:18 pm
Toms,
they are hardly “gutting” kiwisaver, simply temorarily reducing its cost at a time of serious economic downturn. That IS looking to the long term, not short term greed.
Plus, thats my money, and I can better use that money to save for the long term needs of my family.
Also, you can rant about cheese as much as you like, its still a far more generous package than Labour’s stingy joke.
October 8th, 2008 at 1:19 pm
For goodness sakes Toms, everyone knows that Muldoon was the most Left wing economic minister we ever had, and he nearly destroyed the country because the economic realities did not fit with his powerlust.
I would think Key was far more informed on these matters. As for gutting kiwisaver, the economy is not going to revive if the government takes 4% of the gross national wage and lock it away.
October 8th, 2008 at 1:23 pm
Toms – I fail to see your point. Key disparaged the $16 a week cuts as not being big enough. Now he’s sying that we can have more. Where’s your problem with that? As for Kiwisaver, I think it’s a good idea to cut the entry level given the gloomy outlook. It will go up later when conditions improve, but what’s needed in times like this is fiscal flexibility and Dr Cullen is about as flexible as a crowbar.
October 8th, 2008 at 1:24 pm
getstaffed – learn to read beyond the first paragraph.
toms – go home you’ve just been consigned to oblivion. Brush up your CV.
October 8th, 2008 at 1:30 pm
its a start but way to timid to really get the economy moving.
I understand JK has to play it careful given the dipshits like toms and others who need the Gumint to take their money and then wipe their arses for them becuase their too pig thick to do it for themselves
But for those of us who do and can and have always managed their financial affairs successfully it dont cut the mustard
Still some of us will just go on paying our taxes as we always have done on a voluntary basis based on what we want to contribute rather than what the State demands and doing so within the bounds of the legislation using the loopholes available.
Still its a pity to see others who are not so informed or fortunate being ripped off.
October 8th, 2008 at 1:30 pm
Adolf (You’ve never answered why you think it amusing to share your online handle’s first name with Herr Hitler, BTW) you must be gutted!
Look here – “…also a Independent Earner rebate of $10 to $15 a week for people not getting a benefit, Working for Families, or NZ Super, who earn between $24,000 and $40,000…”
National loves Labour’s WFF creeping socialism so much they just EXTENDED it!
October 8th, 2008 at 1:36 pm
What is with that Independent Earner rebate?
The whole point of Working For Families is to give extra help for families as opposed to single people. If you give similar tax rebates to single people as well, you destroy the entire point of having tax rebates in the first place. If they are going to treat everyone the same they may as well just ditch WFF and cut tax by an equivalent amount in a way that will benefit low-income earners – such as a tax-free threshold. Far less paperwork, same result.
Overall it is certainly better than what Labour would do. But when it includes pointless details like an Independent Earner rebate you do wonder how much of it is designed to actually help the economy and how much is designed to buy votes.
October 8th, 2008 at 1:36 pm
outstanding!!!!
i love the the subtle “fuck you” to benefits for families by giving people without kids some money. i dont qualify and to be honest i dont need $500 a year.. but it will help some.
also lets people in their 20’s without kids know that someone kinda gives a shit!
i hope National get rid of working for families in their second term and just give everyone a bigger tax cut.
October 8th, 2008 at 1:39 pm
Toms,
if all you can complain about is the fact that they are giving MORE money to working kiwis and families, thats really pretty sad don’t you think? Is your heart that cold to the current plight of working kiwis who are struggling to put food on the table?
October 8th, 2008 at 1:49 pm
By the way, there is a very interesting comment on a thread on Willem Buiter’s blog, that I came across while following the links from the “NZBC” Q&A article that DPF linked to earlier……
“……I shall let you in on a little secret. Governments and nations throughout the world possess a potent, ready, and simple solution to whatever financial problems they face. Unfortunately, this solution consists in a novelty that is not currently well-understood in the financial community.
However, when conditions move to the extreme and no other solution appears, the allure of novelty becomes ever more formidable.
The novelty begins with a very plain question: what are the financial costs and benefits of Taxation to a nation?
Very few people know the answer to this question because, surprisingly, only several people have bothered to investigate the fundamental matter in the history of civilization.
Briefly, in raising capital for public endeavours, Taxation has no financial benefit for a nation. It does, however, have immense costs that blight its productive power.
So, to put a swift end to the financial crisis, all a nation need do is abolish taxation or, at least, greatly reduce it. With the burden erased or diminished, the productive power unleashed will speedily annihilate any financial misgivings or wounds. The measure will re-invigorate the economy, the wealth of the nation will flourish, and the banks will be deluged with new capital and demands for loans. Governments that take so much and achieve so little will find their insatiable appetite for funds and expenditures unshakeably yoked by the standard of justification.
I am here speaking solely of how a nation raises capital, not how it expends it. I am not calling for the abolition of government. It shall continue to exist and expend, but always by ensuring the benefits of public expenditure surpass its costs.
Adversity can spur us to embrace salutary novelty, if we let it.
The answers are there and always have been. All one has to do is recognize and accept them.
Regards,
Gary Marshall”
(Posted by: Gary Marshall | September 28th, 2008 at 8:31 am)
October 8th, 2008 at 1:55 pm
Abolishing the research and development tax credit!
So we’re looking back to the ’90s low wage economy under National are we?
No innovation, no quality, no international competitiveness – just an economy based on raw agricultural products and service industries. Um, maybe back to the 1890s actually.
[DPF: Toad can you point to any evidence that the tax credit leads to actual increases in R&D? The main activity it leads to is accountants trying to reclassify expenditure as R&D.]
October 8th, 2008 at 2:01 pm
So Toad, are you saying the billions of other dollars spent on innovation, quality and competitiveness have been wasted? Sounds like we need a better set of managers in government then.
Anyway, I thought a low-tech agricultural society was the Greens’ dream?
October 8th, 2008 at 2:02 pm
So toad and the Greens want a tax credit for big business rather than a tax cut for working class folks struggling to feed their families?
Interesting….
October 8th, 2008 at 2:06 pm
If Michael Cullen said ‘here’s ten bucks’, and called it an ‘Independent Earner Rebate’, would he be:
a) lauded for his political / economic vision
b) laughed out of town
c) prosecuted for ‘treating’?
What is the economic or ideological or any other rationale for this (apart from “National = good”)?
October 8th, 2008 at 2:11 pm
Adolf – Sound advice.. and I did read beyond the first paragraph. A spend up on infrastructure and reduced state bloat isn’t enough IMHO. So where is the 10 year plan? The one that describes the vision, rather than simply alluding to the existance of vision? The one that give National a mandate to act and, importantly, come back to the electorate with a “we’re not finished” case in 3 and 6 years time?
October 8th, 2008 at 2:17 pm
Can’t wait to see how Cullen and Clark try to spin this one.
Very conservative, won’t add to a deficit, hasn’t slashed and burned spending. Where do the loony left attack from here.
October 8th, 2008 at 2:18 pm
Dime: “i love the the subtle “fuck you” to benefits for families by giving people without kids some money.”
It isn’t that at all. It is an endorsement of benefits for working people, it extends benefits beyond what Labour has done and is more socialist than Labour’s WFF package.
Although I believe National is probably on the right track with most of this policy, the Independent Earner Rebate is just socialist vote-buying.
http://sjdennis.wordpress.com/2008/10/08/national-undermines-working-for-families/
October 8th, 2008 at 2:18 pm
If they want to know how to reduce their infrastructure spending by a few billion while increasing National wealth I can tell them.
But they would have to give up being an extension of the Green Party.
October 8th, 2008 at 2:22 pm
PhilBest, if only!!!!!!!!!!!!
Well I guess $47 a week is better then a kick in the arse, now all we need to do is to get those tight arsed pricks in the reserve bank to lower the interest rates 2 to 3%, then we would be talking.
October 8th, 2008 at 2:24 pm
Toad – Is there anything the National Party could have done with their tax policy that would make you happy?
I would ask the same question of Tom, but why bother, he’s a cyclops.
October 8th, 2008 at 2:25 pm
so let me get this straight – pinkos like toms don’t want a bigger tax cut? or productivity increases? or growth? gee, no wonder the knives are out for the clarkist wing of the Labour party
October 8th, 2008 at 2:37 pm
Yep, Chicken Little, if National had proposed something similar to what the Green Party will be proposing it would have made me happy. But that’s not due for release until 19 October, although I’ve had a sneak preview. It will involve a capital gains tax (that bit’s public already) and, unlike National’s, it will involve a personal income tax regime that proportionately gives more to those on lower incomes that to those on $70K+.
Lee, that should answer one half of your question. The other half is that the Greens want to support big business (and small business) to do things that are innovative, add value, and environmentally sound. Where we have arguments with big business is when they pollute or degrade the environment and/or treat their workers like shit.
October 8th, 2008 at 2:43 pm
I guess with all the scaremongering around the removal and reduction of WFF, John has played it safe and also pleased people who do not have kids.
Removing the WFF and Independent Earner Rebate and giving them bigger Tax cuts will only give Labour oppurtunity to attack John Key and shift the debate to useless nonsense.
October 8th, 2008 at 2:47 pm
Mr Dennis – i disagree! this was just a way of giving a bigger tax cut.
National know they just need to keep going softly softly and they will win the election.
if they got rid of working for families.. they would be down to 45% (i think anyway).
i hate benefits for families with all my heart. its a disgrace. if i had kids, im not sure i would apply for it (if i qualified).
October 8th, 2008 at 3:05 pm
Toad
Will part of this uncosted tax package be to give more to beneficiaries and bludgers?
October 8th, 2008 at 3:35 pm
You may be right dime. They may be more cunning than I thought. If they introduce this now they can get people used to it, then come out in a couple of years and say “by the way, if we cut taxes we’d end up with the same result with less paperwork”, and can both WFF and the independent rebate. So it could be all part of a careful plan to cut WFF while retaining public support.
If that happens we will need income splitting to ensure families aren’t forgotten about.
October 8th, 2008 at 5:21 pm
When should we start laughing. Didn’t Helen say we should laugh at National’s tax cuts?
October 8th, 2008 at 6:16 pm
Toad,
the bulk of Nationals tax cuts has gone to middle income earners, not to “the rich”, so I cannot see the point your trying to make. The mantra of “tax cuts for the rich” just does not apply here. I’m in that low-middle income bracket, I’m not remotely rich or even well off, and Nationals plan puts far more in my pocket. Of course I would like to have a great deal more of my money back, but this is a good start.
There are only two forms of truly just tax, a flat one, or none at all. But one step at a time.
To your other point, governments have no business aiding business at all, big or small. Any alliance between the dollar and the gun is always a bad idea and leads to political and economic corruption.
October 8th, 2008 at 6:31 pm
Toad,
Who generates all the tax under your scheme when all the people earning over $70K leave?
Good Communist agenda to bring everyone down to the lowest common demoninator like Phul. We wouldn’t want people with aspirations would we?
October 8th, 2008 at 6:38 pm
Toad:
Wait a second. People on $30K are getting a 27% reduction. People on $70K are getting a 16.3% reduction. These facts are not what you think they are perhaps?
October 8th, 2008 at 7:22 pm
Pathetic really after all the noise and hype from those concerned. I remained concerned about the rhetoric because for NZ Inc to prosper and grow in the world two basic things have to happen. Not complicated and dare I say it has long been one of Peters themes.( now I don’t want him back) We must earn export dollars or replace import with local. Not a hard to do and anyone who has even a simple understanding of living as an individual or business knows that you either earn more than you spend or go broke.
So, where were the incentives for businesses to grow exports? Nil, nada, none but plenty of money to be spent on building roads., all to be borrowed or taken from our pockets, none of it earned by producing and exporting more.
This was a typical Nat. bullshit party which confirms once more that the Nats. are really about power and not about change.
No Idea’s, and No Plan. No restraint in Govt. spending, just shifting the deck chairs on the waka.
The Nats. have fallen at the first hurdle.
Working to achieve a top tax rate of 33%. Well 33% is at least 10 years behind a lot of other countries at this date so they fall at that hurdle. For those that think the tax cuts are exciting just imagine how exciting they would be at 25% or better still 20%. All you are doing is accepting crumbs from the Kings table. Its your money why don’t you want it back or better still not taken of you in the first instance.
No redirection of money that is invested by the NZ super fund. The venture capital people made the point a few weeks ago that they had a list of companies with idea’s but couldn’t raise the money to help them. Lets spend some of that money on them. Some will fail. some will be an ongoing business and the odd one will be a world winner. Got to be good for NZ and better than sending the money offshore to prop up overseas companies with a lousy 8-10% return.
It really is time to make a difference but the Nats. won’t.
It remains Party Vote ACT. The more the better.
October 8th, 2008 at 9:32 pm
I like the plan, it is a small step in the right direction. Will put a little more cash in people’s hands and kiwisaver will have more choices for the worker planned into it. The ETS has been shoved in the background but that is a huge added expense that National will scrap.
October 8th, 2008 at 10:49 pm
Don Brash’s tax cuts of 2005 were a whole lot better.
New Zealander’s were stupid enough to vote for Labour and see what a mess the economy is in now. All the additional deadweight loss of WFF, interest free student loans and the expense of Kiwisaver (or is that Kiwiloser in the current market?) and National can barely bring itself to reverse any of it.
This is what happens when people vote for Welfare over tax cuts. At least they are literally paying for their mistakes. It’s called actions and consequences people.
October 8th, 2008 at 11:04 pm
dime says at 1:36 pm:
I’m with you on that one dime. Bludging for Families needs to be scrapped. The whole 39c tax rate needs to be scrapped as well, not just reduced piecemeal so you can appear to be “doing something”. The top tax rate should be 30c to match the company tax rate.
Until National gets real about tax I’ll still be giving my party vote to ACT.
October 9th, 2008 at 1:56 pm
John key took away the REQUIREMENT for the employers %.
That is v dangerous as it shifts the power off of the employee and back onto the employer.
This is one of the reasons why I don’t think John Key should be PM without supervision.
The 2% was a good entry, though he shouldn’t have needed too.
(Labour didn’t consult properly so that’s why it wasn’t started like that in the beginning).
The fact that John key is looking for wiggle room with our Kiwisaver points to his unsuitability for PM.
I don’t trust Him with mine and therefore probably won’t vote National as a result.
Don’t say you weren’t warned.
October 9th, 2008 at 8:23 pm
Personally I would axe kiwisaver in total. The whole thing is reeks of Mafia economics.
October 9th, 2008 at 8:45 pm
Lee, I’ve read the book on Mafia economics and fail to see the similarity between that and KiwiSaver – could you do me a favour and elaborate slightly on what you mean? I’m confused..
October 9th, 2008 at 8:54 pm
What really concerns me is that no one seems to be standing up and talking about, or warning people about the downstream impacts of the whats happending on the global economy…shouldn’t we be a little more concerned about that than winning votes using small tax cuts and mucking around with an existing super scheme. In essence, we may get tax cuts but are losing more by the plan to muck around with the KiwSaver scheme as it currently stands. I personally think we’ve got bigger problems than anyone is really talking about. The main one being the over exposure by most Kiwis to property market, and the dependance on that sector in the future. “Safe as houses” is a term that is probably won’t be frequently used anymore….but hey – what do I know….
October 10th, 2008 at 12:36 am
Stub,
A Mafia thug comes to your store and forces you to hand over a weekly sum of money. They tell you that this is for your own “protection”, so the Mafia can “look after you”.
Employer “contributions” to kiwisaver amount to the same thing. Of course, so do all forms of compulsory taxation.
The ethical term for this is the initiation of force. Being told that the use of this force is “for your own good” or “the good of the country” does not change the fact that its jackbooted political thuggery.
Now to be fair National will not really be changing this situation much, but at least they will move in the right direction, and at least they hold their noses while doing it, whereas Helen and Cullen positively get off on it.
October 10th, 2008 at 12:52 am
Viking2,
I agree with you to some extent, and I have party voted ACT in the past, as well as the Libertarianz, but the real issue for me this election is simply getting rid of Labour. I don’t think that whats left of our freedoms and rights will survive another three years of Clark’s Stalinist thuggery. Given a number of factors to consider, National’s tax cuts are better than nothing, they will help many who are currently struggling, and are aimed at gaining power. This time around, that suits me.
This is, for the foreseeable future, always going to be a problem with those of us with radical political and economic views (I favour the Austrian school myself), but its the sad price of being a lion in a nation of sheep.