How big is big enough?

Written By: - Date published: 9:51 am, October 3rd, 2008 - 21 comments
Categories: tax - Tags:

The first round of the tax cuts that National derided as the ‘block of cheese’ tax cuts kicked in on Wednesday. Next week, National will show us how they would do better.

How much on top of Labour’s cuts do you expect National to offer?

Given National has guaranteed all major areas of spending except the Cullen Fund and Kiwisaver, and insists that its infrastructure borrowing won’t fund tax cuts, how would you see those cuts funded?

21 comments on “How big is big enough?”

  1. r0b 1

    National have been promising $50 tax cuts for so long it will be hard for them not to hit the mark. It has to be $50 less Labours existing cuts – I think they can get away with that (though some of their supporters will be disappointed).

    How to fund it? They’re going to close an embassy in Sweden aren’t they? That ought to cover it. (That was sarcasm by the way).

  2. Matthew Pilott 2

    I’m assuming on the order of $300 a week, since these tax cuts will solve people leaving to Australia, the wage gap, increased mortgage prices, increased petrol prices, increased cheese prices, and all forms of crime.

    They’ll be funded by Key inventing the $1000 note.

  3. r0b 3

    They’ll be funded by Key inventing the $1000 note.

    Brilliant. I LOLed.

  4. Dom 4

    I swear I hear Key say the tax cuts would also cut the teen pregnancy rate, global warming and cure cancer.

    r0b – we really need to lobby to keep that embassy in Sweden. That’s where Abba are from after all!

    With English saying the cuts will be ‘close’ to $50 I would say Helen’s prediction (around $18 on top of Labour’s cut?) is about right.

  5. Ianmac 5

    Copy of my letter published in the Marlborough Express recently:
    “Great to read Mr King’s letter (Mr King MP wrote about good things that National will do). One thing that he did not mention is the Tax cut . We look forward to the tax cuts which as Mr Key says often, will be North of $50 per week. That will be great. It will be at least another $2.500 per year per person, and if only a quarter of the work force get this, it will only amount to nationally $2,500,000,000 a year so good on Mr Key. Trust this man to keep his word and lets not get distracted by debate about borrowing to fund the cuts.”

    Lets have very high hopes, because if not realised…… eh?

  6. r0b 6

    That’s where Abba are from after all!

    All together now: “Money money money, must be funny, in a rich man’s world…”.

  7. Righties? No comments? No expectations afte a year of moaning on this blog? Maybe I should grab some of your comments from the post when Labour’s tax cuts announcement came out.

  8. Mick Wrighton 8

    I heard through the grapevine that the Nats were pretty happy that expectations were sufficiently low now, and they’re gonna pull out the big surprise and offer $50 on top of Labour’s tax cut.

  9. Mick. Did you hear how they’re going to pay for it?

  10. vidiot 10

    SP – I do with you would stop referring to the current tax corrections as ‘Tax Cuts’, all they are and will be are inflation adjustments of the PAYE Tax Brackets.

    A true tax cut was the reduction of the company tax rate. A true Tax cut would be reducing GST. A True tax cut would be lowering the rates charged, not just the levels at what the rates are charged. It is YOUR money after all, and they are just giving you a smidgen back.

    As to how they are going to fund it, who knows – the could go down the Aussie road of Luxury Car taxes, Stamp Duty on House Sales, User Pays, etc – I guess we won’t know till they actually put a policy up.

  11. Mick Wrighton 11

    Steve. John Key said yesterday in an article in the Waikato Times (http://www.stuff.co.nz/waikatotimes/4713654a6004.html) that he’d cut two ‘Labour priorities’.

    With the murmurings around KiwiSaver, cutting the government tax credit is one way they can save a decent amount of cash. The second is slightly more elusive… there are only two more areas I reckon John Key can cut and get enough money out of. 1) Labour’s tax cut for the lowest bracket.. it cost a shitload. 2) Cutting contributions to the Super fund….. (and they’d argue that’s not current super entitlements)

    Fast forward would be an option, but they’ve already committed that money to other R&D spending. So next week will be interesting.

  12. vidiot. So how much do you expect National to cut GST etc? How much extra do you expect National to deliver in your pocket each week by whatever mechanism?

    You’re actaully just suggesting creating different taxes to replace the existing ones, and user-pays health and education, cause that works so well in the States.

  13. Matthew Pilott 13

    vidiot, your distinction makes no sense whatsoever.

    Let’s say the 39% rate is pushed out to $1,000,000, the 33% rate to $999,999, and the 21% rate to $999,998.

    Apparently that wouldn’t be a tax cut, but it would be one if the rates were cut to 38.9999999999999999%, 32.9999999999999% and 24.99999999999999% respectively. Even though you would pay far more tax.

    Not seeing your logic I’m afraid.

    I think what you mean is that the reduction in taxes paid is likely to only reflect relative losses due to inflation, and they would need to be larger to qualify as tax ‘cuts’ (even though the tax paid is being cut, and since when was a tax cut only a tax cut if it exceeded inflation. Since the National party handed you your talking points I suppose.).

    So presumably the next round whereby less tax is paid by all will be a tax cut.

  14. Pascal's bookie 14

    “So presumably the next round whereby less tax is paid by all will be a tax cut.”

    Nope, It’ll just be future proofing for inflation.

  15. Matthew Pilott 15

    PB – I like it! And of course if National also adjusts thresholds by a greater amount, it will be transmuted into a REAL tax cut by the weight of sheer will.

    Hey SP – what would it cost to can the 39% rate (and how many people would that benefit)? I reckon that’s going to be in the gun – 38% by April next year, and incremental adjustments thereafter.

    Would be a clever way to go because it’s very symbolic but actually costs people very little individually, so some of the people that benefit would think they’re getting a great deal, and not realise how much they’ve been moaning about a pittance.

  16. vidiot 16

    MP, your math is out 😉 and don’t forget the additional 1.4% tax we all pay for ACC. My logic was that a cut, is a reduction in the rate of tax charged, and yes by shifting the brackets to the levels you have suggested would do the same – but sadly the levels have only been adjusted for INFLATION so net effect is NIL decrease.

    SP – How much do I expect ? Well I don’t actually expect anything, I prefer to look past the bribes & lolly scrambles and vote for the party that will be most beneficial for my family. And for the record, previously I have voted before for Alliance, Labour and National. This year, still not 100% decided, but I am looking for a change, am looking for something a little more in line with what the public seem to want.

  17. vidiot 17

    MP – the issue with cutting the top tax rate down is that it would cost a hell of a lot of revenue for the government. A 1% reduction would be a huge loss of revenue.

    iirc the top 5% of earners pay iirc something like 50% of the tax take. A more symbolic measure would be to shift the top tax bracket to 100K, leave rates the same. Currently the top tax bracket accounts for ~15% of current wage & salary earners, iirc.

  18. Matthew Pilott 18

    There weren’t actually any sums in there that could be constituted as ‘math’. I did get a percentage wrong though, if that’s what you mean.

    You didn’t address my point – it’s not the method by which you should say a tax cut is an inflation adjustment, if that’s your angle, but the scale. Do you agree there? Because if so, the method of tax reduction is irrelevant. As my example shows.

    Do you also realise that the (il)logical conclusion of your argument is that eventually we should pay no tax, because inflation isn’t going to stop. Or at the least, the tax we pay will be so insignificant as to be worthless due to inflation.

  19. vidiot 19

    I guess the solution to the question and the problem is our population.

    What NZ needs is more tax payers (to spread the load and thus reduce each individuals share), now you can either bleed the existing ones dry (and they jump the ditch – which is what we are currently seeing) or you import a bunch of new ones. But there is the Catch 22, there’s no point importing new ones, if there aren’t jobs for them here to do.

    So what are our options ? How do we get another two million people in to NZ ? It’s either via Immigration or a Baby Boom, but I don’t think a baby boom is the right idea.. as we cant really wait 18 years.

  20. Matthew Pilott 20

    This thread keeps eating my comments, and others’, by the look of things. You could be right about cutting top tax rate, I couldn’t be more certain myself vidiot.

    Posted another comment about your last, basicaly saying that more people = more exp for govt, so not a solution – better to have people we’re paying for at the moment (via govt exp) in work (as has been the case lately…) Will see if teh full one appears.

  21. randal 21

    rOb…randal lol’d too!

Recent Comments

Recent Posts

  • Swiss tax agreement tightens net
    Opportunities to dodge tax are shrinking with the completion of a new tax agreement with Switzerland, Revenue Minister Stuart Nash announced today. Mr Nash and the Swiss Ambassador David Vogelsanger have today signed documents to update the double tax agreement (DTA). The previous DTA was signed in 1980. “Double tax ...
    1 week ago
  • Maintaining momentum for small business innovation
    Small Business Minister Stuart Nash says the report of the Small Business Council will help maintain the momentum for innovation and improvements in the sector. Mr Nash has thanked the members of the Small Business Council (SBC) who this week handed over their report, Empowering small businesses to aspire, succeed ...
    2 weeks ago
  • Seventy-eight new Police constables
    Extra Police officers are being deployed from Northland to Southland with the graduation of a new wing of recruits from the Royal New Zealand Police College. “The graduation of 78 constables today means that 1524 new constables have been deployed since the government took office,” says Police Minister Stuart Nash. ...
    2 weeks ago
  • Tax refund season ends near $600 million
    Almost $600 million has been paid into taxpayers’ bank accounts in the past two months, after the first season of automatic tax assessments. Revenue Minister Stuart Nash says the completion of this year’s tax refund season is a significant milestone. “The ability of Inland Revenue to run auto calculations for ...
    3 weeks ago