Not satisfied with playing the Maori bashing card and appealing to some people’s inherent racism ACT has released a further policy that will appeal to the right’s greed.
ACT has announced its policy on corporate tax and, surprise surprise, it wants to reduce it.
Great things are promised. By reducing the share that the wealthy contribute to the collective good apparently we will all be better off. According to Whyte European and American studies suggest cutting the rate by 10 percentage points will make economies grow by between 1 and 2 per cent extra a year, and each 1 per cent reduction in the rate will boost wages by between 0.3 and 0.5 per cent.
Unfortunately for the poor this approach to economics does not apply to everyone. According to ACT and National paying poor people a living wage costs jobs but letting rich people keep more of the money helps us all.
The cuts are dramatic. The corporate tax rate would decrease from 0.28c in the dollar to 0.125c. My quick calculation is that this will reduce the tax take by about $5.5 billion. But ACT would have us believe that it will all be worth it.
ACT says it can boost economic growth by a third with a policy to cut the company tax rate to 12.5 per cent.
Leader Jamie Whyte says this will increase investment, and job and GDP by one third, leading to higher wages.
He would fund the tax cut by slashing “corporate welfare,” worth about $1.5bn a year, and carbon trading, worth $164m.
If my figures are right there would still be a further $3.8 billion to find.
Of course the big issue is what does National think of this? National has been very careful to not announce policy so far. All that we know is that they will spend $360 million on improving top end pay for some teachers and $212 million on a roading boondoggle. You would normally think that they would not allow the rump of a far right party to force through doctrinaire right wing policy but it has happened before.
Update: ACT candidate Stephen Berry has provided me with some more details of the policy.
Still does not add up …