12 Oct 2008

Many worse off under National's tax plan - Labour

6:45 pm on 12 October 2008

Labour Party finance spokesperson Michael Cullen says many low income earners will be worse off under National's tax cuts than under Labour's tax cut programme.

Dr Cullen told Checkpoint that the package outlined by National leader John Key would do nothing for the economy, and does not answer the need for more saving, investment and innovation.

"It strips away support for private sector investment, it savages KiwiSaver, it completely fails to fulfill earlier promises to increase infrastructure spending, and in return for all of that most people will get very, very little out of this package."

The National Party plans tax cuts of $47 a week for those on the average wage of about $45,000 a year.

The cuts would incorporate the Labour-led Government's cuts which came into effect on 1 October.

National will fund its tax cut programme through changes to the KiwiSaver scheme, and scrapping the 15% tax credit companies receive for research and development expenditure.

National would introduce new tax rates and thresholds from April 2009.

Little for low wage earners, says Clark

Labour leader Helen Clark described the policy as a "dog of a package" which provides nothing for families on modest incomes, and very little for low wage earners.

Miss Clark says the policy wrecks KiwiSaver, and wrecks attempts to build a higher-value economy to drive growth.

Disappointing, say Greens

Green Party co-leader Russel Norman said it would have been more responsible not to pledge tax cuts, given New Zealand's current fiscal position.

Dr Norman says it is disappointing that savings to fund the programme are coming from incentives for research and development, and from incentives for savings in KiwiSaver.

However, he says it is good that National plans no extra public borrowing for its tax cut policy.

Other parties not impressed

The reduction in National's tax cut plan has not earned the party any credit from the minor parties.

New Zealand First likened it to an unwanted Christmas present, United Future says National missed its chance to make the tax system simpler, and the Progressive Party says it will have a negative effect on business.