On the back of last night’s poll that showed the Budget has done nothing for National, I thought a re-examination of the politics of the Budget is in order.
See, we got a whole lot of excited coverage at the time as the journos got swept up in the income tax cuts. Labour, the Tracy Watkins-types of the world pronounced, has been caught flat-footed. It wasn’t the tax cuts for the rich that the Left had been pre-framing the Budget as. Silly Lefties, that dreamie Johnnie beat you again.
Well, that level of analysis is, with respect, what makes Watkins not a very good political commentator. The Left’s positioning of the Budget worked.
Initially, National had wanted to align the top income rate, the trust rate, and the corporate rate on, at most, 30% (options of 27%, even 25% were explored by the Tax Working Group), and there was no talk of lowering the bottom tax bracket. The political parties, the unions, and the blogs had strongly argued that any income tax cuts ought to be directed at lower incomes and giving it all to the rich would be fundamentally unfair.
The Left’s early framing made it politically untenable for the Nats to only give cuts to their rich mates. They were forced to cut the upper rates less than they had hoped and partially compensate the poor for the GST hike but cutting the lower rates more, including the predictable (indeed, predicted) ‘rabbit from a hat’ of larger cuts in the middle rates than had been previously indicated.
So that was about the best outcome on substance that the Left could hope for – forcing National to slightly moderate the Budget. But it was still overwhelmingly a Budget for the rich. As my calculations show, 3 million (90%) of taxpayers got net tax cuts averaging a mere $4 a week. The very rich, the CEOs on million dollar salaries, received massive cuts.
And the Left is winning the politics on that too. Even the usually heavily right-leaning Herald online poll showed that about half of voters thought they would be no better off after the tax swindle. The Colmar Brunton poll shows no post-Budget bounce for National. Instead, the downward trend continues. Why?
Because the Left has successfully proved that the tax swindle takes money from the pockets of working New Zealand and gives it to the rich elite (a fact that fits very nicely with Labour’s emerging vision: ‘for the many, not the few’). Kiwis are not buying National’s spin and the silly excuses about aligning tax rates and supposedly boosting growth, they see a swindle.
And National losing the tax argument is only the start. The Budget is full of public service cuts and dodgy deals like PEDA. National didn’t catch the Left off guard in the Budget. No. They played their only trump and they’re finding it hasn’t worked.