PM's $3b tax cut pitch 'irresponsible'

John Key
John Key
Labour's finance spokesman Grant Robertson says Prime Minister John Key is irresponsible to raise the prospect of a $3 billion package of tax cuts after 2017.

On Newstalk ZB this morning, Mr Key said National had not ruled out a tax cut programme in 2017 either in the Budget or as part of its election campaign in 2017.

The Government had abandoned plans for tax cuts in 2016, which Mr Key said was partly because a $1 billion package would have delivered very little to individuals and was better spent in areas such as health care. He said a $3 billion package was needed for a more substantial benefit to taxpayers and to address bracket creep over time.

Mr Robertson said Mr Key was "plucking numbers out of thin air".

"The Prime Minister is being reckless and irresponsible. When people are being forced to live in cars and garages, when older New Zealanders are living in pain because they cannot get operations, we are a long way from being able to afford these kinds of election bribes."

He said it would put the books back into deficit based on Treasury's forecast of a $1 billion surplus in 2018.

This morning, Mr Key said National was ''not ruling that out for 2017 or campaigning on it for a fourth term in 2017, but having a bigger one, to be blunt, than $1 billion''.

Asked how much was needed to deliver meaningful tax cuts, he said: "$3 billion, I reckon."

While there was not enough in the Government books for that at present, he expected that to change as the surplus built up.

He said it was possible to put that to the voters without it being dismissed as pork barrel, saying at some point tax thresholds had to change to take account of increasing wages.

"The average income is going up and we think in a few years time the average income will be $68,000. Well, the top rate cuts in at $70,000. If you don't adjust thresholds over time you get to a point where the average income earner is paying the top threshold. That can't be right."

Act leader David Seymour said waiting until 2018 was leaving it too long.

"Even a $3 billion tax cut in 2018 would barely cancel out the $2.1 billion cost of bracket creep since the last round of tax reforms. It would be more of a 'tax reset' than a tax cut.

He said Mr Key was losing credibility on tax cuts by trying to have it both ways and signalling tax cuts for the right while also trying to please the left by failing to deliver them sooner.

"It strains credibility that the Government is prepared to allow eight years of bracket creep before cutting tax. A more credible approach would be to cut tax now, with a promise to adjust tax brackets with inflation rates."

 

 

 

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