Bill English has confirmed that National still intends to give the average worker a $50 tax cut. That’s $18 a week more than they will get in Labour’s tax cuts after 2011.
If National’s would increase the cut for all taxpayers by around $18 a week it would cost nearly $3 billion a year. In reality, that won’t happen because Key has said there will be no additional tax cuts for low-income workers.
So, what form of tax cut could deliver $18 a week for someone on the average wage of $46,000? Cutting the 33% rate to 29% would do it. The cost would be about $600 million a year, the 1,400,000 million people with incomes below $20,000 would get nothing and the 230,000 people earning $80,000 plus would get $46 more a week. Basically, tax cuts for the rich. Of course, that does nothing about the dreaded 39% tax bracket and you would have the economic purists still in tears about the gap between top income tax rate and the corporate rate but it would cost a billion to bring it down to 33%.
So, where would the money come from for these tax cuts for the rich? Even the cheap option costs $600 million – hardly chicken feed. It’s not going to be funded from cutting waste. Just get the idea out of your head. For all their chirping, National has identified only 1% of the waste that would need to be cut to fund even their cheapest tax cut option. National hasn’t talked about spending cuts anything like $600 million a year; indeed, they have had to guarantee to maintain Labour’s spending in all major areas except education. There’s virtually more cash surpluses either. That only leaves one option… and it becomes clear why National is so desperate to borrow more and sell-off our assets.