Labour pledges to hike top tax rate

David Cunliffe
David Cunliffe
Labour says it would raise the top personal tax rate 3 cents to 36 cents in the dollar in a shake-up of the tax system.

Its changes would also a crackdown on tax avoidance by multinationals.

As revealed by the Herald this morning, Labour says it would raise as much as $200 million a year in additional revenue by tackling tax avoidance by big international companies.

However, Labour Leader David Cunliffe today said Labour's fiscal plan would see a Government he led build "strong and sound fiscal foundations" by posting surpluses every year and paying off the National Government's "record debt" by the end of its second term.

He said Labour's spending would be "restrained" but revenue would be boosted by tax measures including a capital gains tax.

However, by raising the top personal tax rate to 36c for those earning $150,000 a year or more, Labour would raise almost $200 million in the 2015-16 year, rising to $350 million a year by 2020-21.

By aligning the tax rate for trusts with the new top tax rate, the use of trusts to avoid tax would be minimised and again, a further $200 million a year in revenue would flow into Crown coffers, rising to $336 million by 2020-21.

Mr Cunliffe said the tax hikes would mean wealthier New Zealanders were being asked to "return a small part of the very large tax cuts they received from the current Government".

Labour estimated the tax hike would affect 2 per cent of tax payers who earned on average $260,000 a year.

They had received tax cuts at a time New Zealand could not afford it and National had engaged in "unnecessary borrowing" to pay for them

- By Adam Bennett of the New Zealand Herald

Don't bring back Cullen

Mike, You have a very short memory, claiming Cullen done what he should have done by not giving tax cuts to the so-called rich at a time when the Government could have afforded it. Instead he put an extra 300,000 income earners onto welfare at further expense of those so-called rich as a bribe for continued Labour support when the economy could least afford it, as well as removing the expectation students should have to pay interest on their loans that so-called rich people should then have to pay.
Most of your so-called rich were simply taxed extra for years to pay for Labour's excessive and unneccessary welfare policies and National simply repaid them after nine years of being fleeced.
Oh, and the miniscule GST increase has effectively increased the tax take from your so-called rich as they are the ones that are actually spending more, and a higher spend equals higher GST. The last thing this country needs is a return of Cullen. 

Bring back Cullen

Rob: Cullen saved our (and National's) behinds. He did the most important thing a government should do in good times - not giving tax cuts to the wealthy, nor spending up big. He did the sensible thing, the thing you do in your own home - you pay down the credit card bills, and he reduced the deficit.

This was a pretty amazing thing to do for any politician - he avoided the things that get votes from the party faithful this year for the things that were good for all of us in the long run. When things are good you pay down the debts so that when things are bad you can afford to borrow to tide things over. As I said, National were extremely lucky Cullen did the right thing and the sensible thing. I'm glad to see Labour promising more of the same sensibility, and I hope that National ups the ante and promises to be even more sensible.

When National reduced the income taxes on the rich by raising GST on the poor it was a manifestly unfair move letting the rich get richer and the poor get poorer - putting that a bit right, even though it raises my personal taxes, would be a good thing.

Now, if we can only find a way to get the DCC to realise that spending money it doesn't have is a bad thing and that maybe they could learn a little fiscal self control from Labour...

Deficit

 

@speedfreak and others: With regard to what deficit there is or isn't.. it's a redundant measure, as it depends on what the government has been doing with their total services and investments. The present government has a short-sighted investment path typical of nearly all nations (aside from some South American countries!).
Political performance measured against financial performance with no account of other metrics is shallow (we should really use entropy, whether exergetic, financial, or social). And what is the purpose of a country? Surely it does not exist to simply operate as a financial institution.
My point on the nanny state is that it is a construct made up by right wing politicos to embed fear in the population about left wing policies. The mere name "left wing" nowadays seems to have negative connotations, which is absurd.
I could argue all day, but it's a lost cause. National are bamboozeled by financiers, Labour are not disimilar from a headless chicken (I know, I've made many a chicken headless), and all the other parties are motivated by petty issues. Lament the Kiwi democracy.

 

Even the spin's broken

Labour contributed the surplus to largely paying down debt and and retirement planning plus a few pet projects involving families and schools, leaving NZ with an almost record low debt of $10 billion and in a position to weather the GFC and Christchurch earthquake pretty well while all the time they were being crititised by National for not spending more on tax cuts etc. Since then National have been trying to paint Labour as doing what they had actually refused to do when National has:

- increased Govt debt to nearly $90 billion, forecast to borrow $10 billion a year for the next five years (most of the Christchurch quake costs still to be factored in)
- sold off the сountry's best income earners and prevented others for bidding on contracts then closed and sold them off because they didn't have enough work
- presided over decreasing school rankings and pay controversies
- lowered the top tax rate which has cost more to date than the income from the asset sales gained in total and continues to lose $1 billion per year
- increased GST and other fees to compensate for tax cuts and increasing the cost of living
- changed employment laws at the whim of big business eroded the rights our predecessors fought for
-ignored referendums calling them a waste of time and money when they show overwhelming support against them and their policies but want one when it suits them
- Given mass corporate charity where it suits them
- spends 6x the money to chase beneficiary fraud finding $25m in fraud (avg $60,000) resulting in a 60% incarceration rate for an average of 17 months, than tax fraud which is $1 billion a year (average 800,000) and suspected 5-7x higher, resulting in a 20% incarceration rate for an average of 18 months

Oh, and the most forgetful PM in history who while claiming Cunliffe is untrustworthy because he can't remember one thing, forgets the amazing amount of times the words "I don't remember that" came out of his mouth.

Wires crossed

Gloug,

There appears to be some confusion on your part, where does National propose a capital gains tax on property? reading this article it is your beloved Labour party proposing this tax on the family home, no one else, make sure your voting for the right party for the right reasons!

Realities

@Rob: Some things weren't spun though - like the GFC and recession. They weren't imaginary excuses for National to borrow money. They were real. National did well not to make wholesale cuts to the public service but Labour still opposed the cuts. It doesn't make sense for them to now complain that debt is too high. You ask what the Govt's key achievements are and I would put that at the top of the list.

Indeed I do

Always wanted a Countach in my shed if you can arrange it, Rob. Make sure it's a silver one.

BTW. Hope your ready for at least 3 more years of National because due to any half decent opposition, that's what your gunna get. Enjoy.

Spin to reality

Dead right sv3nn0. Spin to reality. Remember the mining boom we were promised, catching up with Australia, the trillion dollar coal industry in Southland, the coal to diesel plant, the oil industry boom, the Antarctic treaty, and the TPP partnership (which looks likely to be added to the list)? What have been the key achievements since National got in? The dairy industry (but that started booming under previous governments), more subsidies for the aluminium industry, the sale of assests that we already owned, and an earthquake. Brilliant.

Besides, if you think that acting out political strategies at arms-length by empowering the private sector is any less an interference with people's lives than occurs in a social-democracy then you're kidding yourself.

Deficits again

From 2001 to 2009 Labour contributed $14.88b to the CUllen fund that is now worth $25 billion ... and which National stopped contributing to in 2009. At the same time, Labour year on year reduced the government's overseas debt (which then ballooned out under National). That is where your "surplus" went Speedfreak and why Key found no matress stuffed with dollars and gold bars (as he seems to have expected). Got any other suggestion of what do do with a surplus?

 

 

 

 

 

Spin it this way or that

@Gloug: Wide ranging comment there! My opinion is significantly different to yours on most points, but I do agree that people ultimately choose what they want to believe. I also agree that people don't want a return to the "nanny state" that Labour imposed, and so that affects what set of spin they choose to believe. The key is ensuring the politicians turn their spin into reality once elected!

I guess I'm not average

glougs: I guess I'm not average, as I don't watch rugby or Shortland Street. What I do remember is that Cullen was spouting lyrical about a large surplus when Labour were vainly seeking re-election. I also remember that when National took power and opened the books, there was no such surplus to be found.

Obviously, one party was lying and most likely it was Labour in their attempt at re election.

It's got a lot with Labour aligning with the Greens and, as most don't want the Greens anywhere near a position of power, National get the vote. Pretty simple really. 

Deficits

To be fair: National inherited a decade of surpluses(!) turned them into deficits, increased debt, and the tax cuts were offset by increases in GST (a progressive tax system replaced by a flat if not regressive tax). Meanwhile unemployment has risen, inequality exploded,  assetts sold off for a song, and the environment treated like a proverbial toilet. And endless examples of corporate cronyism fail to dent popularity.

Oh, but swallow the National Party spin and Donkey's grin because the GFC, the Christchurch Earthquakes, and any other excuse that is regurgitated necessitates the undermining of our health and education services (privitisation by stealth), and decimation of workers rights and wages.

Our main export is milk powder... something our own health ministry tells parents to avoid because breast is best (and it is). Is it not immoral to make profit from a product we know is not the best choice for human health? Oh, but the babies being fed the formula are Chinese babies so it's alright if we look the other way.Most people's main source of retirement savings (their house ) will vanish when the inevitable capital gains tax is introduced.. why oh why have we stuck our head in the sand.

We face a world with increasingly volatile fossil fuel prices and yet we dogmatically stick to investing in them even when we have the opportunity to divest ourselves (what an economic advantage that would be for NZ!).

Why anyone would vote National is beyond me. Oh that's right, because they are told that they want to by the corporate media and NZers follow like sheep to the slaughter. Too afraid of the aethereal Nanny State and the commie under the bed, the average NZer would rather watch rugby and Shortland St than stop and think about their future.

Don't fix what's not broken

To be fair to National, they inherited a decade of deficits heading into the GFC and recession. Labour have opposed their cuts to spending the whole time and now criticise the debt level? As for tax cuts they said at the time that they made no difference because of the increase in GST? Labour should just concentrate on their own policy because most agree that the country is on the right track financially. As for tax hikes for those earning more than $150,000 - watch as business costs like new tractors, new dental equipment, and other imported work related expenses increase and tax take subsequently decreases. Don't fix what's not broken locally. Just concentrate on ensuring Google and Facebook pay their fare share here. That will impress me more.

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