Nationals hypothetical tax cut package has not gone down well. People do not appear to like the fact that it is small, hypothetical, and irresponsible, all at once. For example, here’s Hamish Rutherford this morning:
Taxpayers asked to blindly wait
National is asking voters to wait almost three years for tax cuts, giving no detail about how much extra they will take home each week, or even a promise they will get anything.
After weeks of hints and signals Prime Minister John Key said the government would set aside $500 million a year for tax cuts in the coming years, before deciding to whether reduce tax from April 2017.
Such a step would come only if the economy could handle them without tipping New Zealand back into deficit.
The timing of the possible cut saw National face accusations on social media that it was using the announcement to launch its 2017 election campaign.
Key, who in opposition mocked Labour’s “block of cheese” tax cuts, has said repeatedly warned any cuts would only be “modest”, targeting “low and middle income earners”.
However, yesterday he conceded that by definition, lowering tax rates or increasing the thresholds at which they rise means high income earners will take home at least as much as those earning less.
I’m happy for others to aggregate the underwhelmed opinion pieces, because I want to pick up of Key’s analytical point. He claims that there is no way to decrease taxes on low income earners without giving upper earners at least as much. That is nonsense. People can design tax systems to give breaks to whichever people they choose. Any decision Key might make to give upper earners the same tax cut that low income earners get is a choice he is making.
For example, if a government were to turn the current 17.5c rate for $14-48k into 16.5c, but it did not want high income earners to get the tax cut as well, then it could at the same time bump the $48-70k rate to 31.5c. That way everyone earning between $14k and $70k would get a tax cut, with the peak cut at $48k income, while people earning over $70k would see their total tax rate remain almost exactly the same. Easy.
Key dressing his choices up as economic gravity is insulting to New Zealanders.