6 Sep 2017

Fact or Fiction: The $1000 question

From Election17 - Fact or Fiction, 12:01 pm on 6 September 2017

National says middle income earners will lose $1000 a year under a Labour government. Fact or Fiction puts that claim to the test.

Under National’s proposed tax reforms, due to kick in on 1 April next year, people on incomes above $52,000 (about the median individual income) will gain $20.38 per week as income tax thresholds rise - an annual tax cut of $1060.

Under Labour, income earners will not get this tax cut as the income tax thresholds will remain the same. In this sense, National's claim is true, although technically, income earners don't 'lose' $1000, because they're already paying it in tax at the moment - they just won't gain it back under Labour.

However, National’s statement ignores Labour’s families package, which Jacinda Ardern says would leave most families better off compared to National’s tax cuts. So where does that leave National's claim?

Labour's package includes changes to Working For Families that would increase the amount eligible families receive in tax credits and also extend the scheme to more families.

For a two-child (primary school-age) family with an annual household income of $90,000 or less, the extra Working For Families tax credits they would receive under Labour would offset the loss of National's tax cut - and in many cases would actually leave them better off.

For a two-child family earning more than $90,000, the extra tax credits would not match what they would get from National's tax cuts. If the family earned over $100,000, they would not get anything at all under Labour.

The formula changes again for families with very young children, who would receive Labour's $60 per week BestStart payment. And a family with three or more children could earn in excess of $110,000 and receive more under Labour's families package than they would from National's tax cuts.

Verdict: Fact in some circumstances, fiction in others. Check your own situation under National here and Labour here.

Fact or Fiction is a joint initiative between RNZ and the University of Auckland's Public Policy Institute