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Great expectations

Written By: - Date published: 1:54 pm, October 1st, 2008 - 25 comments
Categories: election 2008, john key, national, slippery, tax - Tags:

John Key is being pretty evasive on his tax cut plan. He won’t say whether the famous ‘$50 a week for the average worker’ (note that’s not every worker, your income has to be $47K plus) is additional to Labour’s cuts, the first round of which came into effect today. Given the evasiveness, it’s safe to assume that it won’t be. In fact, Key now refuses to even confirm that $50 range.

The other question is how the tax cuts will be funded. There’s little or no money in the kitty, so it’s got to be borrowing or spending cuts. Part will be borrowing. National says it woud borrow for infrastructure but that’s money it doesn’t have to fund through tax, the borrowing allows tax cuts. Cryptically, Key said this morning that National’s tax cuts would be bigger than Labour’s but the same on ‘a net basis’ because they would change ‘two things’.

So, what can these ‘two things’ be? One will be Kiwisaver. It is one of the few large areas of government spending that National has not guaranteed. National clearly intends to slash spending on Kiwisaver, presumably by changing the employer contribution.  The only other large area of government spending that they have not guaranteed is education but they can’t slash that. They need those middle-class mums to get them over the line. No, the second thing will have to be a change to Labour’s tax package. Specifically, they could remove the increases in the 21 cent threshold – currently set to rise from $14K to $20K in 2011. That would free up around a $1billion that coud be re-directed to cuts at higher incomes. Of course, that would mean smaller tax cuts for most people; most of the money would go to the well-off.

Whatever the package turns out to be, it had better be good. National has generated enormous expectations around tax cuts. They have promised a package that will be a panacea, solving everything from the recession, to doctors’ strikes, to emigration, to pain at the petrol pump. National has spent 9 years building expectations of the tax cuts it will offer.  Next week, they will finally have to deliver.

25 comments on “Great expectations”

  1. Anita 1

    The second could be WFF; fiddle WFF down and raise the tax cuts.

    P.S. PrEFU on Monday!

  2. Janet 2

    Why has JKey refused to debate Helen Clark on Radio New Zealand? Some of us listen to Radio NZ (200,000+ at times) a lot more than watch television and would appreciate such an opportunity to hear them both. Geoff Robinson almost sounded sarcastic (he hasn’t been sarcastic in three decades!) after Key’s patronising dismissal of the request this morning. After John Key said he was too busy to debate on Radio NZ, Geoff thanked him for taking time out of his busy schedule to talk to Morning Report.

  3. gobsmacked 3

    Key on TV3 this morning:

    Interviewer: “No extra borrowing from National to afford any of your programmes?”

    Key: “Absolutely none.”

    That is an outright whopper. McCain or Obama would get ridiculed if they came out with that sort of nonsense. So will Key be challenged on this by our media? Don’t get your hopes up. It’ll be left to some students on Agenda, doing the real work.

  4. appleboy 4

    Key is a total drip – how stupid does he take people for? “we’re borrowing for infrastructure, not tax cuts”!!! I’m just amazed he has the audacity to spill such blatant lies and be still able to keep a straight face.

  5. Rakaia George 5

    Appleboy, do we currently have national debt? Have we not just been given a tax cut? Exactly, so Cullen is “borrowing for tax cuts” too. It’s exactly the same (stupid) argument.

  6. Rakaia Goerge. No because Labour isn’t increasing debt as a % of GDP to pay for tax cuts.

  7. Rakaia George

    You should watch the Money Masters too. Our whole finance system is based on debt.
    It is a very unstable system and relies on the creation of more and more debt.
    That is why John Key wants to borrow more. he knows that in the end not he but we get to pay the real price of this system with our resources and assets which he will happily sell to his banking mates, just like it has happened in the US.

  8. vto 8

    SP you said “No because Labour isn’t increasing debt as a % of GDP to pay for tax cuts.”

    ha ha, you’re a funny man. Such a twister of things to suit your own needs and desires. You have trouble standing up straight?

  9. r0b 9

    vto, you’re sometimes more coherent and interesting than this. Steve’s answer is completely correct, Labour has been reducing our debt (and the interest that we pay on it). Perhaps you should go have a nice cup of tea and a lie down vto.

  10. Vanilla Eis 10

    I’ve previously been lead to expect a $50 tax cut from a National government in 2009. Quite how Key expects to achieve this on my $33k income I don’t know, but I’m looking forward to the tax policy release next week when they can paint that pretty picture for me.

  11. vto 11

    r0b, SP’s standards on most things are completely rubbery. Can’t take him seriously.

    What Rakaia George said above is correct, and SP is twisting things AGAIN to suit his own politics. And it seems you are too by selectively selecting.

    Sometimes my comments may be a bit puerile but it is only response in kind.

    Cullen has also borrowed for tax cuts. But carry on and spin it (I mean lie) – its election time after all.

  12. r0b 12

    Vto, National wants to borrow for tax cuts (like adding to the mortgage to buy a new car).

    Labours did not borrow for tax cuts (it is still paying off the mortgage and buying a new car out of income).

    Can you really not spot the difference? Open both eyes and try again. See it now?

  13. r0b 13

    Actually in truth vto, debt may increase a little even under Labour’s plans. That is a consequence of the current financial crisis, and it adds to the cost of National’s plans even more than it adds to Labour’s. But over all Labour has done well in bringing debt down.

  14. vto 14

    r0b, bull. Labour could have had less borrowing if it did not have tax cuts. i.e. borrowing for tax cuts.

    Whose eyes are shut?

  15. rave 15

    We can see the effects of the credit crisis spilling over to NZ already. No time for more borrowing for tax cuts for the rich but high time to take back the stolen assets for nothing and get millions of kiwis cheering Labour on!

    The Greens are calling Labour to use the Cullen Fund take back the South Island power lines leased to Wachovia Bank now taken over by Citigroup for next to nothing with most of its debt covered by the US government. The Greens are too polite. Time to take it back with no compensation!
    http://www.scoop.co.nz/stories/PA0809/S00657.htm

    Craig Norgate’s buyin to Siver Fern Farms stymied for lack of bank capital. “Mr Norgate says a number of banks that had committed to participate in funding the transaction had since been unable to finalise their credit approvals in time for today’s part-settlement”. Give us a few weeks he says…
    New capitalisation of a single desk meat industry can be done by public investment from the Cullen Fund. Such social investment will carry with it social responsibility of the industry.
    http://www.nbr.co.nz/article/pgg-wrightson-can-t-settle-silver-fern-farms-deal-35906

    Instead of using our taxes to bail out the collapsing private sector, we should be demanding that public money is invested as equity which carries the right to plan the economy for peoples needs and not banksters profits.

    Let’s hear how Key and Clark are facing up to this global credit crunch.

  16. vto 16

    Actually r0b, it is not borrowing for tax cuts at all (either party). It is borrowing for govt expenditure. And a drop in income is not expenditure (except it seems in left circles, somewhat bizzarely, but not unexpectedly).

  17. Bill 17

    On the bright side, when the Nat’s give me my $50+ p/w tax cut (’cause I am after all an average person) then…well, let me put it this way. I don’t pay $50 p/w in tax at the moment.

    Therefore I can only sensibly believe that Nat are going to increase benefit levels in order that they can tax me enough to give me my $50 tax cut.

    Why didn’t they just say that instead of keeping us all guessing?

  18. Evidence-Based Practice 18

    No wonder John Key is so worried about facing Helen Clark on public radio as she would wipe the floor with him. Faced with intelligent questioning instead of TV sycophants, and no ad breaks to escape into, he would have to actually answer some questions, such as this one.

  19. r0b 19

    r0b, bull. Labour could have had less borrowing if it did not have tax cuts. i.e. borrowing for tax cuts.

    A certain level of government debt is considered usual and desirable – you don’t pay it off if the money can be used more productively in the economy. That’s what Labour have done, brought the debt down to this acceptable level, and given tax cuts. Compare with National who can only fund their wild promises by raising the debt level again – borrowing for tax cuts.

    Actually r0b, it is not borrowing for tax cuts at all (either party). It is borrowing for govt expenditure. And a drop in income is not expenditure (except it seems in left circles, somewhat bizzarely, but not unexpectedly).

    Bit late to start trying to get sophisticated now vto! Yes it is borrowing for tax cuts, that’s exactly what it is. That is true whether nor not tax cuts are regarded as expenditure or drop in income (a separate question).

  20. vto 20

    You know r0b, when all the heat dissipates and the witty witticisms wilt the left and right are generally only arguing over degrees. I suspect that is the case here.

    I agree a level of debt is prudent for a few purposes such as spreading costs over the generations and the productive us of money etc. It is just degrees that are being disputed.

    We have to disagree on some things though. Labour somehow doesnt borrow for tax cust but the nats do (do you seriously believe anyone believes that?). Tax cuts as an increased expense or decreased income.

    The problem many posters on this site run into imo is the uneven application of standards e.g. the nats lie but the labs dont. haha. nats borrow for cuts but lab doesnt. haha. thats when the puerile response is forthcoming, annoying all and sundry but completely deserved.

    captcha” bambino likewise. ha ha

  21. r0b 21

    You know r0b, when all the heat dissipates and the witty witticisms wilt the left and right are generally only arguing over degrees. I suspect that is the case here.

    Often the case yes, though I think there is genuine substance in this particular debate.

    We have to disagree on some things though. Labour somehow doesnt borrow for tax cust but the nats do (do you seriously believe anyone believes that?).

    Yes I do. National will announce their package next week. If it includes borrowing, they will get pinged for it by some media (though most will just go ga ga over the lollies).

    The problem many posters on this site run into imo is the uneven application of standards e.g. the nats lie but the labs dont. haha. nats borrow for cuts but lab doesnt. haha.

    It’s a partisan blog pushing lefty labour movement perspectives. It’s not exactly hiding the fact is it. But there’s a difference between partisan an puerile.

    thats when the puerile response is forthcoming, annoying all and sundry but completely deserved.

    Nope, you can do better, and you know you can do better.

  22. vto 22

    r0b “But there’s a difference between partisan an puerile.” If that’s the case then it is a very fine line.

    And the sheer quantum of partisan pu pushes it over that fine line.

    And the holier than thou attitude smudges to ruin.

    But as you say it a lefty blog… so what can be expected? Certainly not a full and complete picture on any particular issue. blah blah. still, a bit of fun ay..

  23. lprent 23

    Ummm didn’t Whale already lay claim to being puerile? We can’t take that away from him. You should probably leave the word for his exclusive use.

    Yep. Here…

    http://www.stuff.co.nz/sundaystartimes/4700052a6619.html

    So is this a dirty trick, as some claim? And if it isn’t, what does count as a dirty trick? Rees’s trick was just a prank, says right-wing blogger Cameron Slater. “I think that a dirty trick should be somewhat hidden, and malicious in the way that you’re doing it.” Google-bombing was “a puerile trick and it’s something I do, and I would accuse myself of being puerile.” It would be malicious if the entry was “rapist” instead of “clueless”.

    I couldn’t resist….

  24. mattyroo 25

    Any of you losers that are saying that actual crime has decreased in relative terms to population, are by extension saying that this crime is alright. This may well be true that it has decreased relatively, however on the whole violent crimes are on the increase, and probably more so in the areas of society, where the population, is not increasing as proportionately as the crime.

    clinton, I can only hope that next time you are out of your house, some a**hole comes round and steals everything you own. Being a loser socialist though, you probably don’t own anything, as you’ve never got off your pimply butt to actually earn a respectable living and get ahead.

    Having been the victim of two significant crimes this year, this is right now a hot issue for me. Having lived in the same place for a long time and not had any crime ever, for me personally it has increased tremendously.

    And worse still, I had one of your horrible ilk tell me recently, that one of these crimes was ok, as these “down and outs” “need these chances to get ahead”.

    I loathe, actually hate, anyone who is defending the current “crime wave” we are having in this country. If I ran into you smith, I would perpetrate some of mine own crime on you, for good measure.

    Horrible little puke. Keep defending the indefensible.

    IrishBill: that’s a ban for life and I’ll be asking Steve if he wants to lay a complaint with your ISP for threatening him.

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