Key says donate tax cuts to charity

John Key wants people who do not need to spend their upcoming tax cuts to donate them to charity, a step he hopes will help develop an American-style culture of giving.

The next round of tax cuts, due in a fortnight, will mean an extra $16 a week in the hand for workers on $45,000 a year, and an extra $24 a week for those earning $100,000 a year.

Speaking to a Philanthropy New Zealand conference yesterday, Mr Key said those who "can't bring themselves to spend their tax cuts" should give the money to a charity rather than save it.

The cuts are part of the Government's economic stimulus plans, aimed at increasing household spending.

Mr Key said, while many people needed the money from tax cuts to pay debts or bills, "I am just as sure there are many who are in a position to donate some of that extra income".

Labour leader Phil Goff said the Prime Minister's reasoning was "deeply flawed".

The cuts gave little to low-income workers, who would most likely spend it, and more to those on high incomes, who were less likely to spend it.

"It smacks of the old aristocracy to say `we will make things worse for the low-income people and then, out of the generosity of my heart, I will call on other well-heeled people to donate theirs to charity so we can help them in their plight'."

Mr Key, whose tax cut will be $98 a week, gives a "reasonable portion" of his $393,000 salary to charities each month - both individuals and organisations - and said he intended to continue doing so.

While New Zealanders donated as much per head as other comparable countries, he said there was potential to do more, especially when the recession ended.

He would like to see New Zealanders become more like Americans - who gave twice as much of their income to charity as New Zealanders.

When living in the United States he had admired its "culture of giving", he said.

This was partly because they earned more but also because of a "culture of generosity and giving ingrained in them for generations".

"That's the kind of attitude I want to foster here."

The Government could not legislate to make people donate, but it could encourage it.

Mr Key said about 60% of the population donated in some way each year without knowing they could claim some of the amount back as a rebate.

"Imagine someone who used to give $10,000 to an organisation. Now with the tax deductions, they get a third of that back.

"So they can give $15,000 and, with the rebate, their net giving is the same. So there's tremendous capacity for New Zealanders to increase their giving."

Businesses who could not longer afford to keep up their donations should be encouraged to instead donate time and services - and the Government was working on a "gifts-in-kind" scheme to extend rebates to donations of goods and services.

Spare cash?

What April 1 tax cuts will mean weekly

•Workers earning up to $40,000 a year: $0 ($10 for some who qualify for the independent earners' credit).

•$50,000- $70,000: $18

•$80,000: $19

•$90,000: $22

•$100,000: $24