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National’s one-trick election pony – the eternal mirage of tax cuts

Written By: - Date published: 7:04 am, February 20th, 2017 - 46 comments
Categories: national, tax - Tags: , , ,

Regular as clockwork, every election year, National pop up with their one-trick election pony, the promise of tax cuts, an eternal mirage that never quite delivers. Here we go again:

Joyce signals low and middle earners’ top rates target for tax cuts

Finance Minister Steven Joyce has signalled that cutting the top tax rate paid by lower and middle income earners is his top priority for tax cuts.

Surpluses are predicted to rise to $5.4 billion by 2018/19 and, provided they come to pass, that provided options, Joyce said in his fist major speech as finance minister. They were better public services for a growing country, building the infrastructure a growing modern economy needed, paying down debt “as a percentage of gross domestic product” and reducing the tax burden “and in particular the impact of marginal tax rates on lower and middle income earners, when we have the room to do so”. …

Promising to target “lower and middle income earners” is nice spin, but in National’s long-ago cuts what was actually been delivered for these groups did not match the promises, the befits went disproportionately to the rich. But more fundamentally, NZ faces far too many challenges to be diving in to tax cuts now. Everyone knows it, even Bill English:

Bill English gives financial update, says reducing debt and earthquake recovery more important than tax cuts

Infrastructure spending, rather than tax cuts, has taken priority in Finance Minister Bill English’s last time showing off the Government’s books.

Despite a forecast surplus of $473 million for the current financial year, rising to $8.5 billion in 2020/21, English – all but confirmed as New Zealand’s next prime minister – says reducing debt and tackling the costs of the Kaikoura earthquake, are higher priorities than reducing tax rates. …

Flashing the tax cut mirage yet again is just cynical election year politics from National.

46 comments on “National’s one-trick election pony – the eternal mirage of tax cuts ”

  1. One Anonymous Bloke 1

    They have a few other tricks: concocting lies about the opposition, discouraging participation, selling legislation…

    • aerobubble 1.1

      Take Peter Franks highly specific Moro panelist, whose always high precise point are manufactured to deliberately mislead. Good ad for his practice, well if your guilty. His recent outing on the panel saw him directly missing the fact that people are being improvished by the housing crisis. Only a big corp lazy stoolly, not the big corps who work to progress their shareholders interests but their own at the expense of the shareholders. Take fees for education, restricting supply raises pay for highly skilled workers which in turn raises wages for executives, whereas a good exec would want a larger pool of less well paid skilled workers. These same execs force down wages for unskilled, who then haven’t the money to spend on their shareholders companies products. People like Franks live in this gutter between sloth and greed, feeding highly contrived talking points that push and maintain bad efficiencies in the economy.

      • aerobubble 1.1.1

        Tax cuts, while savings are cropped from state housing, during a housing crisis is poor management of the economy.

        A murderer is now doing time for killing Winz staff, having failed overseas, he returns to NZ and cant get a state house in rural NZ. Is everyone who goes on a OE expected decades later to return successes? really. This loser thought he had a right to be housed, i think the disgraceful little toad did, but the fact that policy was to reduce pop. in rural NZ, which is now hurting growth in rural NZ is just more of the same poor management of our economy by a shrunken parliament stacked with senetorial types. Dunne aspriationals. Long serving the corp stoolly class.

        • michelle 1.1.1.1

          I agree 100% aerobubble it was wrong how this man was so badly treated and he is not the only one and pull the benefit has a lot to answer for she is one nasty piece and that is putting it mildly

          • Sam C 1.1.1.1.1

            so let me get this straight – you’re saying that Paula Bennett is responsible for inciting a man to kill two Government employees and attempt to murder numerous others?

            Jesus wept.

            • One Anonymous Bloke 1.1.1.1.1.1

              In fact, Michelle said Bennett has a lot to answer for, considering the (well documented) ill-treatment meted out to beneficiaries including Russell Tully.

              Your childish hysteria says something about you, and nothing else.

              • aerobubble

                Tully is lowlife, that should reasonable be clear, the plain simple fact that govt has depopulate rural NZ, had houses to place Tully in, and did not, and is now side tacking the issue with security guards instead of just housing needy people. Its sad that we know how rural aea are crying out for workers, that houses are empty, and desperate homeless people often working cant move nto rural regions. So increasing scarcity of workers in cities and pushing up wages that then can afford those workers sufficient rent. Its the policy of big bad interventionist National govt to force people out of rural state housing, run that housing down and cause extra stress on the property market and even kids forced io cars overnight.

  2. Keith 2

    2008, National promise tax cuts well aware of the meltdown from the growing GFC and nearly 2 years of drought in some of the more agriculturally productive areas of NZ. They also promise amongst other things 300 extra police along with resources for South Auckland AND no rise in GST!

    The government books they inherited had record low debt, virtually none in context.

    Once the tax cuts for the upper half of earners kicked in plus costs for roading obsession and police they were horribly short on money to maintain public services.

    Queue GST rise, major budget cuts in one form or another to public services, ironically slashing the likes of the police budget by a third. Then sucking “dividends” out of SOE’s unbelievably from the likes of Housing NZ and essentially bankrupting Solid Energy in the process they try to claw back the losses. Add in Chicken Little moments like ACC’s manufactured crisis, that saw money pouring in from grossly hiked levy (tax) rises. Still short on money! Raise petrol excise tax repeatedly. Still short on money!

    Queue phase 2 to cover for tax cuts, borrowing, again clouded by SOE’s borrowing on behalf to cover for the government but in any case government debt takes off and its never looked back.

    Queue phase 3, asset sales and just lie through their teeth after that. And who would have thought state houses, built up by previous generations for social needs could spin such a quick buck!

    So the first tax cuts were very much carried by the less than well off because National looks after their well off voter base but now Joyce promises cuts for lower and middle earners. We can’t afford this either but fuck it, Joyce will book it up on the never never, some other generation can pick up the pieces of this bribe. A do anything it takes desperate move to cling to power!

    And best of all once these unaffordable meagre cuts to the individual take hold they’ll cut back more public services, borrow even more and have to sell off whatever else they can find, maybe a few thousand more state houses, just to pay for the cuts, well temporarily anyway!

    National Party economics 101!

    • David C 2.1

      Wow Keith.
      You really do win the prize for the most selective historical rant I have read (sofar today anyway)

      Please insert into your essay the following topics:

      1. National came into power with the country already in recession.
      2. National came into power facing a structural deficit engineered by Helen “social engineer” Clark and Micheal “I have spent it all” Cullen.
      3. Christchurch earthquakes.
      4. WFF. The greatest way to fuck over the poor ever invented.

      • One Anonymous Bloke 2.1.1

        Speaking of selective ranting… 🙄

      • mickysavage 2.1.2

        Come on David was Labour really responsible for the GFC? Was it really Helen Clark and Michael Cullen who plunged the world into recession?

        And Labour ran surplusses all the way through their term. This allowed National to go to town and plunge the country into debt.

        And I thought you guys were all in favour of tax cuts. Is it only when the rich get them that you approve?

        • One Anonymous Bloke 2.1.2.1

          I’m afraid the depth of David’s analysis doesn’t go down that far.

          A rough translation is: love and obey National, hate everything else.

          • David C 2.1.2.1.1

            MS and OAF.

            The four items I mentioned are simple facts.

            Key and National really did get handed a shit sandwich.

            • David C 2.1.2.1.1.1

              OAF.

              Property people (like myself) love Labour.

              Sir Robert Jones has joked before now that a Labour Govt in Wellington earns him many millions a year more.

              • One Anonymous Bloke

                The full quote is:

                It’s no secret the commercial property industry, numbering over 100,000 people in all of its ramifications, favour Labour governments simply because they like vibrant economies. As the past 40 years show, these always accompany Labour’s periods in office.

                But, the stultification corresponding with National governments is welcomed by bigger players as it throws up acquisition opportunities, aside from which there’s more to voting than economic issues and dull governments never last forever.

                What does “stultification” mean, David? What does “vibrant economy” mean. David?

                😆

              • greywarshark

                David C
                You sure are selective in your arguments. You love Labour when it comes to your property interests you say. Yet you don’t say you vote for Labour. That must mean their other policies to consider fairly the vast majority of people are not satisfactory to you.

                So of course you don’t like Working For Families. Because it helps relieve the tax burden of the vast majority of working families. Which is why you don’t like Labour.

                A lot of people don’t understand the reason for WFF. It was brought in as partly simplifying the tax system. Previously the tax tables had special codes of I think F1 for one child, then rates for F2 and F3, and it stopped there or at an F4 rate. So the extra expenses for young families carrying out their duties to care for their children were recognised and tax was reduced accordingly. This reflected an effort by government to be fair and to have progressive taxes. WFF is the modern version.

                And talking about not putting up GST is an indication that there is a possibility of a rise. Years ago I heard that GST in Switzerland was 15% and thought it high. But it tended to be a prosperous country. Here we live on fevered dreams of the wealthy and personally aspirational, and were talked about as being the Switzerland in the south. I observe that we are no-where near Switzerland, in wealth comparison or location.
                We should be using GST as an extra tax avenue alongside income, and company tax which only gets reduced by the number of people it employs, and GST at 7 and a half percent, with 5% going to government and 2 andhalf percent towards regions and special areas like sparsely populated tourist locations based on their total GST take.

                Then if the volume of money spent can be increased by a good product at the right price, there is the multiplier effect, and good takes of GST and a return on that for infrastructure spending.

                Now what do you think of that as a business idea David C. Pick it to bits for me will you? I am sure it will be no good because it doesn’t benefit just you.

            • Keith 2.1.2.1.1.2

              What utter bullshit.

            • One Anonymous Bloke 2.1.2.1.1.3

              Funny how “the poor” exist as soon as you want to make up some ranty-tanty line about them. Simple facts? More like simpleton.

              Cullen, for example, raised the minimum wage higher than inflation for nine years running, and by 2007, the unemployment rate was ~3%. The GINI also dropped slightly.

              These are not the facts you are looking for.

            • michelle 2.1.2.1.1.4

              Stop talking crap David do your homework they got a surplus and a small IMF debt that they have increased tenfold.
              They (the gnats) showed they are gutless as they didn’t want to touch the working for families policy they have also shown they rule for the rich now we don’t want to see another peasant revolt like our English ancestor had but if we continue with the gnats bullshit social investment approach we might as well build another 2 prisons to put more of my people in
              (Maori ) and wait for the revolt and boy it will be nasty

            • dv 2.1.2.1.1.5

              When you use the word ‘fact’ are you meaning alternative facts by any chance?

            • NZJester 2.1.2.1.1.6

              Bollox.
              National came into power with the Income stream from taxes and SOEs at a level that would have kept everything running smoothly.
              It was the cutting of the tax rate and borrowing to do it that screwed everything up.
              The GFC would not have affected New Zealand as unlike all the other countries that had borrowed themselves heavily into debt, Labour was forward looking and paid this countries debt off. Debt they had inherited from the National government before them I might add.
              Funny how under Labour governments we get better funding of services, more infrastructure built and our debt levels go down, while under National governments our debt goes up, infrastructure building tends to stall or the wrong types of infrastructure get priority over those that should be built and all essential services get underfunded. Under Labour government’s crime and poverty get the breaks put on, but before Labour can start to repair the damage the next National government gets in and takes the breaks back off again. Only large corporates tend to do well under national Governments, while small to medium sized business tend to make more after-tax profits under Labour Governments even while paying a higher tax rate. That is because more of the average workers have the money in their pockets to spend on nonessential goods.

        • tuppence shrewsbury 2.1.2.2

          Tax cuts for the bottom brackets and shifting the 33c @ 48k bracket out to 33c @ 60k make the fairest economic sense. That way single income households on the average income aren’t caught in the second highest tax tier.

          • michelle 2.1.2.2.1

            yes I agree to changing the tax brackets but not a miserly extra $20 a week

            • tuppence shrewsbury 2.1.2.2.1.1

              that’s $1000 a year. Quite a significant amount actually given how tight some peoples budgets are

      • Keith 2.1.3

        No earthquake when the tax cuts came in and yet before the first vibration in Christchurch Key was backing out of his no GST rise lie.

        Record low debt after 8 years of real surpluses, none of which were a book cooking exercises like Nationals one off and 7 years of real deficits.

        Sorry dude but the old earthquake excuse doesn’t cut it as it was virtually self funding from EQC and insurance and as you may well know Christchurch is still battling our useless government to get back on its feet!

      • Draco T Bastard 2.1.4

        2. National came into power facing a structural deficit engineered by Helen “social engineer” Clark and Micheal “I have spent it all” Cullen.

        No they didn’t. Or, to be more precise, Labour had a plan to shift the structure so that there wasn’t a decade of deficits. National came in and made those projected deficits worse.

    • Nic the NZer 2.2

      Unfortunately our social and political debate is centred around a core myth, and because of this is largely premised on nonsense. While you say the country can’t afford one spending program or the other or tax cuts the government does not face a budget (spending or borrowing) constraint it faces an inflation constraint (even in mainstream treasury economic understanding). This means the government can afford all these things until inflation picks up (at which point it should look at tax increases to maintain spending levels).

      The implication is (if you claim the country can’t afford it economically) that the country is close to full employment and high inflation. So is that true?

  3. David C 3

    Nats bribe the upper/middle with tax cuts while the Left bribe the middle/lower with a different flavour of lolly.

    The trick with this is tho you actually need to have your hands on the levers of power to fulfill the promise and at 7%, the populace has little appetite for Andy Crap’s lollies.

    • One Anonymous Bloke 3.1

      A cynical and abusive selective rant.

      Not to mention a comprehension fail: the preferred PM rating is skewed massively in favour of the incumbent. When it’s all you’ve got to celebrate it’s probably best to keep quiet.

    • David C’s abandoned any pretense of civility and is going pure vindictive now, showing his true colours; bile yellow and toilet-cleaner blue.

      [lprent: ‘Civility’ is not one of my criteria to moderate. He did make a point albeit his framing did make it run close to the bounds of being pointless trolling. But thanks for drawing it to my attention. ]

      • David C 3.2.1

        RG and lprent.

        Its a fact that Helen pulled off a couple of enormous bribes while in power in WFF and interest free student loans.

        Good on her tho, the punters were dumb enough to vote her back in.

        • Robert Guyton 3.2.1.1

          Helen?

          Is that Syrup of Figs on your breath, David C?

        • Draco T Bastard 3.2.1.2

          WFF was a massive subsidy to businesses who didn’t want to actually pay enough for people to live on.
          Students shouldn’t have to take out loans to live and to get an education. Education is, after all, an investment in our society.

        • Sabine 3.2.1.3

          so how do you explain that National in almost 9 years never got rid of WFF?

          Must be the dumb punters who voted them back in again and again. ey?

    • halfcrown 3.3

      I think I prefer the so called Andy Craps flavour lollies
      ie
      Decent affordable medical care.
      Decent well-financed schooling system so the potential of ALL children is is well and truly explored and nurtured, instead of encouraging the Charter School farce
      Decent affordable housing for the ones who can’t afford to buy a house
      Decent infrastructure ie Not all these crappy roads of insignificance, but an overall plan for all the transport needs by modernising the public transport systems ie rail, like they are doing in Europe.
      Decent affordable power supply.

      Instead of tax cuts to people who no doubt are aware of every tax dodge(legal) to ensure they reduce paying their share of the tax burden.

    • michelle 3.4

      There is no trick David it is about ruling for all not just the 1% when are you tories gonna realize its not all about you or I its all about us

  4. garibaldi 4

    It’s all very well to complain about the deceit of tax cuts being promised by National, the fact of the matter is that they work. The old wiifm works and we know the Natz will push this to the max. It has been predicted all along. The av punter ,who doesn’t give a stuff about politics, falls for it every time.

  5. Observer Tokoroa 5

    .
    TAX and the Election

    Labour should cement into their Policy that they will be giving Tax relief to Middle and Lower earners.

    Labour will be seeking the money from the extraordinary wealth gained by some New Zealanders over recent years and from higher earning Trusts. Also from foreign Businesses trading within New Zealand, such as the main Banks, Medical, Health and Services.

    They will examine John Key’s undeclared earnings and Business interests and levy accordingly.

    In short – there will be a noticeable and very large shift of wealth from the very very wealthy to the Common Man in New Zealand.

    It must be done ! It must be done Quickly.

  6. Draco T Bastard 6

    Promising to target “lower and middle income earners” is nice spin, but in National’s long-ago cuts what was actually been delivered for these groups did not match the promises, the befits went disproportionately to the rich.

    Even tax cuts solely to the lower tax brackets only goes to the rich.

    Firstly through their own taxes being lower in the lower tax brackets.
    Secondly, the rich will put up the prices on everything that the poor buy so that they’ll get that tax cut too.

  7. Steve Reeves 7

    To do as Joyce is saying, i.e. tax cuts for lower and middle only, you would have to increase tax at the top too…because if you increase a threshold for higher-taxes from say 48k to 60k then those on 150k will also benefit, unless you increase the rate above 60k in order that these high-paid people do not also get a tax cut.

    So, next time Joyce plays the electorally palatable “tax cuts for lower and middle” he needs to be asked to explain how the higher-tax payers will not also benefit (which is clearly in his mind at least not so electorally palatable).

  8. Steve Reeves 8

    Whoops..sorry DTB made this point 🙂

    But it’s worth repeating 🙂

  9. Acting up 9

    Is the Nats get in again, I wonder by how much will they increase GST on everything (including food), to pay for their latest headline bribe? Up to 17.5% maybe? (used to be 10%)

    • Craig H 9.1

      GST hasn’t been 10% for a very long time, and Labour put it up to 12.5%. Agree that it should go down, not up though.

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