Written By: - Date published: 1:32 am, October 9th, 2008 - 56 comments
Categories: election 2008, john key, kiwisaver, national, slippery -
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That was going to be the title of my first post on National’s tax-cut plan but then it turned out National’s plan would actually make about 1 million taxpayers worse off compared to Labour’s cuts (all figures derived from the Budget and National’s tax policy). That 1 million comprises approx 650,000, including nearly all super-annuitants, on incomes between $14,000 and $24,000 and approx 350,000 on incomes between $24,000 and $44,000 who get Working for Families, Super, or a benefit. They would miss out on Labour’s threshold rises and National’s Independent Earner Rebate. Someone living on a trust or investment income does count as an Independent Earner for National.
Leaving aside, for now, the 1 million Kiwis and their families National would make poorer (and the 1.1 million on less than $14K who get the same amount from both parties), let’s look at what those who do get something get. If you are one of the 400,000 who earn between $24K and $50K and work or live off investment or trust income, and you remember to apply for the rebate, you would pay $7-$14 a week less tax by 2011 with National. Then there’s the 700,000 on high incomes, $50K to $100K. In this range, you’d pay $6-$14 less a week. After that, the sky is the limit: the 50,000 on $150K plus get at least $33 a week, at quarter of a million, you’re pocketing $72 a week. If you’re one of the thousand or fewer with an income over a million a year, you would get $360 and more a week from National.
It’s all small change at every level. The 1.1 million who would get an additional tax cut from National would see their after-tax incomes increase by 1-2% (the 600,000 on $14-24K would see theirs fall 1-3%). Nearly all of them would get $14 or less more than they would from Labour. About 300,000 of them would have to offset that against lost Kiwisaver contributions of $20 plus a week.
Fewer than a quarter of taxpayers would get a net benefit from National’s cuts, with nearly all of the money going to the small number on more than $80K. Everyone else either gets nothing, gets less, or loses more in Kiwisaver contributions.
Key promised his tax cuts would lift the economy, close the wage gap, lower emigration, lift productivity, prevent doctors’ strikes… The idea that these cuts would lead to any of those promises being fulfilled is, of course, laughable. Key has had his big shot and he blew it. Now we know that, for all his hype, Key can only deliver small change.
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Tiger
Yes welcome to NZ politics – parties are all about cynical, short sighted ploys for votes?
Bill the people are not fed up with labour. the media and the journalists are fed up with labour because they are not right wing lickspittles. How can the people havea say when the meedia is busy making stuff up and ignoring the truth. this is a country of educated fools, co-dependent suckers and self made idiots led by a foreign owned meedia and a whole cadre of pinheads who’s only educational qualification was learning funny writing a j-school. They were shoulder tapped for their hair and teeth and voila we are being led by the nose by a pack of dancing fleas. the issues are never discussed except in hysterical tones bordering on irrational violence so that subtantively every discussion is effectively quashed before it begins. All the hardworking decent people I know are firmly behind Labour and will show their appreciation for their policies at the election on nov 8 without being spun on by espammer and dunnycan.
I run a small company – heavily in the R&D phase at the moment – it’s left me seriously thinking about where I should be doing this, it’s warmer in Oz, closer to my customers in the US
I hope your company doesn’t print atlases or produce GPS devices, Paul
Scribe – When I buy vinyl from the states, half of it seems to be shipped via Australia. It’s all hubs and spokes these days…
MP,
Just trying to lighten the mood a bit — all this financial talk is getting people riled up.
I know. Back when I were a lad we’d be lucky to talk finance. Had to pay half-pound for the privilege after walking five mile through snow in bare foot. Tell that to the youth of today and they won’t believe you…
And given the last GPS I used, you’d think we’re closer to the US geographically too.
From what I have heard around the watercooler, it seems to me that politically National have made a huge mistake by tinkering with Kiwisaver and, to a lesser extent, with the R&D fund. Why? Because National as a party has got form when it comes to scrapping super schemes. There are now 800,000 New Zealanders who just got told that National is going to make their super scheme a lot less attractive.
The question a lot of them are now asking is can they now trust National to not get rid of Kiwisaver completely if they win office? National has handed a “trust” issue on which they are extremely vulnerable on their past record on a plate with cream and a cherry on top to Labour.
Bill English doesn’t like Kiwisaver, and I think that his personal antipathy to the scheme may have led National to mis-judge the public mood and its fondness for the scheme. Time and again, people comment that kiwisaver is the first time we’ve saved for the future as a country and approve of the scheme. Thematically, that just plugs into the R&D fund being cut as well – mortgaging tomorrow to pay for today, a charge National are vulnerable to because it has all to often (tax cuts in the 90′s paid for by neglecting infrastructure investment is another example) been true.
Linked to that and more subtle but also perhaps pertinent is that like kiwibank, it’s cunningly named, and that has meant that it has becomed linked in people minds with something vaguely patriotic, Kiwisaver equals a better, richer future for New Zealand and New Zealanders.
Labour now has the opportunity to turn the election into a referendum on Kiwisaver, and that is a referendum that they should easily win.
Scribe: I was wondering where would be the best place to base my company – at the moment I’m pretty flexible manufacturing will be in China anyway – once the initial R&D phase is over, we have something to show the money people and we have to staff up (next year) then I have to set down roots somewhere – I can easily live in NZ, Oz or the US so I have those as easy choices – in fact finding good staff in Oz of the US would probably be easier – but I’m a kiwi, I like living back home and would like to do it all here – but as I start to run my biz plan past VCs to fund all this those tax issues are right there on the spreadsheets staring them in their faces
What happens next month will change what I’m presenting to the money guys early next year (and maybe whether I’m looking for money here of in the US).
Despite the economy it’s actually a good time to be starting a tech company – do it right and you catch the rising edge of the next biz cycle
One simple fact, among many, ignored in the generally poor media coverage of Key’s announcement (especially TV):
The Big Plan policies were those already announced by Key in his speech to National’s conference, several weeks ago. RMA, ETS, bureaucrats, blah blah.
Therefore they are not a response to either the global financial crisis, or the PREFU. They predate the events to which National is supposed to be responding … so how can they be dressed up as the Big Plan?
There is no Plan. There is only Spin. And fools falling for it.
[lprent: Another in a long line of "I used to be labour followed by 'I'm really from the right and I listen to talkback'". Sigh, how many of these trolls are there. They're slow, repetitive, and very blatant. This one doesn't appear to be one of our usual suspects. So give it a little room to learn.
Dock: I'd suggest that you read the Policy especially about trolls, flame starting, and engaging with other commentators. Lift your standard and find something original to say - that isn't just a repeat of hundreds of other comments (where that stuff has been refuted many times).
If you don't - then read what I like doing to trolls. I think of it as "Evolution in Action" - helping improve the online community by terminally banning trolls and feeding their comments to the anti-spam bots.]
Boy oh Boy I just love reading what left leaning people have to say about any given situation.
I have to say that I ‘once was left but now I am found.’
In my younger days I supported the Labour party as my Dad and his. Unfortunately no more, and even my dear old Dad states he can no longer recognise the party.
The main change is the thrust away from the premise of ‘Power to the people’ to ‘Power at all costs’.
I have watched with disbelief both Helen and Michael mishandle incident after incident, giving fuel to the opposition to throw back.
I really think for the voter who has gotten sick of the mistakes and the PR spin surrounding
Paintergate
Doongate
Speedingate
I wont make criminals of parents but now I willgate.
Childs lunchboxgate
and now the unbelievable double standard shown regarding
Winstongate
has reached tipping point.
Arguing over tax cuts and the ins and outs of Kiwisaver will not save Labour from possibly the biggest defeat in my considerable lifetime.
Dock, if such trifles are, in your mind, equal to ‘power at any cost’, they I’m flabbergasted you have the ability to use a keyboard.
Take S59 for example – Labour did what they believed to be the right thing, in the face of widespread opposition. Tell me, how is that power at any cost?
It’s the bloody opposite.
With that reasoning, I’m pretty sure you’re lying about ever supporting Labour. If you supported them, it must have been incredibly weak support – to change it because Clark sugned a painting for charity, or was in a fast car…? If that’s representative of the depths of your political views then I guess it might not surprise me if you supported Labour for no reason other than your old man told you to vote that way and you never stopped to think otherwise.
P.S child’s lunchboxgate? That is THE worst use of ‘gate’ I have ever seen. You managed to disgrace a disgrace.
Dock,
The moment you mention discredited and idiotic drivel like Paintergate, Speedergate and Doonegate…. you brand yourself a lying troll.
You were never a ‘leftie’. You just make this shit up to graft onto your vain wafflings a fake emotive pastiche.
PS Mathew and I have both spotted you for a liar independently of each other… before we saw each other’s post. Go figure.
Real world: a global crisis, affecting everybody.
Dock’s world: a painting, affecting nobody.
If you’ve really had a “considerable lifetime”, you haven’t learned much.
Red – that would be like me saying I voted National all my life, but won’t now because Key lied about his shares – it’s just not credible, however you look at it.
MP,
that would be like me saying I voted National all my life, but won’t now because Key lied about his shares – it’s just not credible, however you look at it.
I would consider myself centre-right politically (far right socially), though I have voted Labour in the electorate and my last three party votes have been for three different parties.
If John Key pals around with Winston after this election, though, reneging on his pledge, National will never get my party vote with Key as leader.
So it won’t be like I’ve been National all my life, but THAT decision would be enough to swing my vote.
everybody knows about double entry bookkeeping and the compound interest but not everybody is psychologically disposed to use mans inventions to ensnare and enslave others and ensure a captive cohort of snivelling grovelling creditors as a psychic payoff for being a shrivelled up mysogynistic misanthropic psychopathic manque. like brah for instance who numbered his corn beef slices or branson who insists on punching holes in the ozone so idiotes from nowhere can fulfill their destiny or whatever
Scribe: Should National win the Election, they may well need the help of Winston. Then the MP’s who harbour much more rightest beliefs, will roll John Key and get stuck into the real agenda. I am sure that then you could cope with your own ambivalence.
Remember that it was John Key who made tax-cuts the essence of all that was wrong with the Government, and that with significant tax-cuts all the problems will be solved. Pity that there is a huge flow of people moving to NZ from Australia, and that R&D has been stifled etc. All that is left for you is to shout the same meaningless slogans. Get Creative!
Ianmac,
I am sure that then you could cope with your own ambivalence.
You’re wrong. And it’d be much more negative than ambivalence.
National states that these personal tax cuts are to improve productivity. That by giving personal tax cuts people will be more willing to work hard. This is complete BS:
You’ve got, very generally, 3 types of people:
1.) The people who don’t think that $12/hour is worth getting up for. A tax cut isn’t going to make any difference here and these are the people that you want to get either in to the workforce or education.
2.) The people already working. A tax cut will make no difference to productivity here as they’re already working as hard as they can.
3.) Investors, the people who live on investment but don’t actually work. These people aren’t going to change their investment habits any so personal tax cuts are just a pay rise courtesy of an already overstretched government budget.
The ways to grow the economy is through savings/investment and R & D both of which National have just cut back significantly with their economic package. The only thing personal tax cuts can do is help maintain prices in a minor deflationary period – we seem to be on the verge of a global depression.
well I never. People in this country work damm hard already and they dont get paid enough now so how is a tax cut going to improve productivity? thats just mumbo jumbo from the worst gang of cheeseparing chsisellers that ever wanted a GO at the treasury benches.
And in comparison Labour’s tax cuts are designed to achieve what exactly randal?