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Reviews of Nats’ tax cut/Kiwisaver cut/R&D cut policy

Written By: - Date published: 7:27 pm, October 8th, 2008 - 37 comments
Categories: election 2008, kiwisaver, national, tax - Tags:

Just a quick note at the start for our press gallery friends who live in central Wellington on high incomes. 50% of New Zealanders have an income below $27,000 and 50% of workers earn less than $37,000 a year (all of which is heaps higher than it was under National). The point is this: National’s tax cuts are smaller for those people on middle incomes ($20,000-$40,000) than Labour’s are; $47,000 plus is not middle income.

The political actors weigh in on National’s tax cuts:

ACT: Not enough cut
Greens: More debt and poverty for those on middle incomes (20-40K)
NZF: What are tax cuts when your work rights are lost?
UF: Nats ignore low incomes, UF proposes income splitting (which benefits well-off)
Labour: Gutting Kiwisaver and R&D stupid, families get bigger cuts with Labour
NDU: Workers forgotten by National
EPMU: Top earners win, workers lose
PSA: Job cut fears
SFWU: Nats punish low income workers
NZEI: No service cuts but where’s the commitment to improving education?
CTU: Slashing Kiwisaver, no cuts for low incomes, bad for workers 
Business NZ: Small steps in the right direction
Employers’ and Manufacturers’ Association: Tax cuts good, R&D credit cuts bad, Kiwisaver cuts good
Manufacturing and Exporters’ Association: Bad call to cut R&D credit and Kiwisaver

Hardly glowing.

37 comments on “Reviews of Nats’ tax cut/Kiwisaver cut/R&D cut policy”

  1. Monty 1

    After nine years of increased taxes under Cullen, then a relunctant and minor tax reduction weeks before an election the Labour Party will defeated, I am pleased that the Nats are going to give some tax relief to the hard working middle classes who have been bled dry by Cullen and Clark.

    I fully expect those comments from above, but understand that after Cullen has wrecked the economy and blown out the massive surpluses to massive deficits, then I am grateful that the Nats will win the election one month from today and again start the long process or repairing the economic foundations of New Zealand

  2. And still National leads by 20 points.

  3. RedLogix 3

    Monty,

    Unfortunately your idle fantasies are being drowned the financial apocalypse now swamping the world. The neoliberal ‘free market’, ‘greed is good’ religion that is all that the National Party believes in …is dead.

    Read the news buddy. You lost. You just do not realise it yet.

  4. rave 4

    The level of statistical illiteracy in the media is striking. Must be all the business or media degrees or hip pockets as Steve suggests.

    The ‘average’ rules. ‘Middle’ income is equally misleading.

    Median and mode are more instructive but don’t cover the part of the population (around 2/3ds?)that will be worse off under the Nats.

    Maybe the ‘robbed’ as in ‘Peter and Paul’?

    Or Robin Hood?

  5. Greg 5

    NZ has some of the lowest taxation in the OECD [1], hovering around _half_ of the average. Is that enough to provide quality services and infrastructure? The continual focus on tax cuts frustrates me – there are far more important issues for New Zealand to solve if the aim is to improve everyones living standards.

    [1] http://www.oecdobserver.org/news/fullstory.php/aid/2174/Tax_levels.html

  6. r0b 6

    Ahh Monty – favourite saying “screw the poor”. You’re doing a fair job of appearing reasonable today.

    after Cullen has wrecked the economy and blown out the massive surpluses to massive deficits

    How often should I repeat these facts? As often as Monty and his ilk lie? It could go on for ever. NZ has a strong economy which is well placed to weather the current international financial crisis. See for example this Treasury summary:

    Economy well placed to meet challenges in 2008
    The New Zealand economy is well placed to meet challenges in 2008 but uncertainty and market volatility is likely to persist in the short term. In addition, the current high inflation environment further complicates the outlook for 2008. However, the sound fiscal position; the prospect of tax cuts; and the ability of the Reserve Bank to move quickly on interest rates, if growth and inflation drop more quickly than expected, mean that the New Zealand economy is well placed to meet potential challenges over the next year.

    Or how about Reserve Bank Governor Allan Bollard in January this year:

    New Zealand had responded positively to significant global shocks in the past few years, and there was no sign of those shocks abating, Dr Bollard said.

    “We have enjoyed a decade of growth, the longest period of economic growth since the post-World War 2 era. Inflation has been low, averaging 2.2 per cent since 1998. …

    “We have been able to absorb recent shocks reasonably well because of the improvements in our economic institutions and policymaking frameworks, avoiding the boom-bust cycles of the 1970s.”

    Though it is very early days even new policies like KiwiSaver are starting to show their potential in this respect:

    According to funds industry performance analyst FundSource, net outflows for the quarter of $48.6 million would have been much uglier without KiwiSaver inflows of $353 million. … Mr Atkins said the high voluntary uptake suggested a big proportion of the funds would be invested in growth assets. “This will provide a boost to the financial services industry, with greater funds under management also potentially boosting local equity markets.”

    With respect to the current international financial crisis and its effect on our economy Armstrong summarises:

    The ugly numbers are down to international circumstances. They are not the finance minister’s fault. But the update is so full of bad news that National is punting it will hang around Cullen’s neck through this campaign like the albatross around the neck of the Ancient Mariner.

    “Screw the poor” Monty and his ilk can’t win on the facts, but they just might win on the lies.

  7. milo 7

    Greg, that only applies to single-earner two parent, two child families on the average income. That’s not really representative. Also, the figures are old. Now that we have introduced Kiwisaver they will be higher.

    r0b; just want to be clear. Is ten years of deficits, and debt peaking at 30% of GDP okay with you? If not, what should Labour do different?

  8. milo – debt peaking at 30% of GDP is not bad at all given the current international climate. You liked the idea of taking a global perspective when it comes to wealth how about when it comes to debt rations? Let’s see…

    The US (a special case for a whole lot of reasons, not least the fact the US dollar is the international currency): around 67%

    Britain: 43%

    France: 65%

    Canada: 29%

    I couldn’t find Aussie’s (their private debt to GDP is about 280% but I’d say they have considerable govt wealth to offset that).

    Y’see your problem is you keep setting the parameters to suit your argument but the result is retardedly transparent…

  9. Macro 9

    Monty

    And you think think that the National Party grab bag for the rich is going to make it better? Mate they will cut out all R&D initiatives in industry – forcing more of our brightest and best off shore. The proposals for Kiwisaver will move more debt into the private sector – which is already more than enough. Where is the foresight in this?? Under National’s tax package. Over 80% of the lolly scramble will go to the earners in the top 30% of income. Now you tell me that that is fair. And just before you tell me to go out and work hard and make more money – I’m well into the top 5% of income already so yes – I would receive a big hand out. (And I live in JK’s electorate) But I think the package STINKS!!

    A person on the median wage would be crazy to vote National because they offer them NOTHING! And that mate is half the working population.

  10. A person on the median wage would be crazy to vote National because they offer them NOTHING!

    To be fair bro they do offer them the chance to pay more tax than they would under labour and I’m sure it’ll give them a nice warm feeling to know they’re paying for my hookers and coke…

  11. Ianmac 11

    I checked the tax advantages for my neighbours in view of John Key promising $50+ coming in tax relief. It seems I got it wrong. I looked up, for instance the tax relief for a couple with 2 children and an income in $20,000 to $36,000 bracket.
    In 2009 they get no improvement to their income under National tax package.
    In 2010 they get $5.72 less than Labour’s package.
    In 2011 they get $5.96 less than Labour’s package. Ref:NZEIR
    There were even less pleased when I told them that John Key said that the tax relief for those on a higher bracket was payed for by cutting back on Kiwsaver. Them’s the facts. Sorry.

  12. Ianmac – just tell them they are paying that money for the good of the country (and me) and it will trickle down to them eventually (especially if they have a good line on Colombian blow or a hot daughter…)

    That’ll make them feel better about voting National…

  13. Macro 13

    Robinsod

    yep! Sorry I was looking at it from an entirely self-interested point of view!

  14. Typical bloody socialist – only interested in individual gain…

  15. Janet 15

    So the effect of all this under Key – many public servants and others currently employed will lose their jobs as a consequence of the attack on the public service and the current economic crisis. They will then go on the unemployment benefit or only be able to find casual and part time work. They then fall into that low income category where they don’t get any relief from tax cuts, and will also have higher costs as funding is squeezed out of public services etc. In a few years time things will get so unequal and people so desperate that there will be another hikoi of hope and a left government will have to come in to clean up the mess.

  16. and a left government will have to come in to clean up the mess.

    but not all of it and not in a way that locks in real change. Lost opportunities I tells y’

  17. Pascal's bookie 17

    … that there will be another hikoi of hope…

    Hope not. Pitchforks and torches.

  18. rolla_fxgt 18

    Just wanted to query where you got your stats from (excuse me for questioning, but stats with out references leave me weary). And I assume that by differentiating between all NZer’s and workers, your trying to make the stats work to reinforce your idea.
    Also & most importantly, if as I assume the all NZer’s criteria you refer too, includes everyone, even those that don’t or cant work, then its just being disingenuous, or would you have babies working? I mean everyone excepts some people cant or wont work, even those on the hard right.

    This post reminds me of the quote, there’s lies damned lies & statistics.
    I’ve come down on some of the kiwiblog posters this week for lying and resorting to dirty tactics, so I’m calling you guys on the same. Debate the facts sure, but keep it relevant & honest.

    [it’s all adults, it doesn’t include people below 15 (that’s Stats’ measure for adult, not mine) – basically all adults need an income to support themselves and dependents. Ignoring the adults who aren’t in fulltime work (ie, the 500,000 superannuitants, the 250,000 students, 250,000 beneficiaries, and 500,000 part time workers is dumb, the figures are from stats. I’m sure you’ll know be withdrawing you’re accusation of distortion against me. SP]

  19. Macro 19

    Janet
    But the fat cats will be fatter! 🙂

    Robinsod
    I’m a lost cause I’m afraid.
    maybe I should think about the good of others for a change.

  20. Macro 21

    “This post reminds me of the quote, there’s lies damned lies & statistics.”

    Disreali said that and I used to quote it to all my students too!
    The facts and figures I have quoted are derived from recent treasury and ird tables on income and tax, and from the National press release.

  21. milo 22

    Robinsod – I agree with you on debt. I had just thought you might agree with Dr Cullen, that 22% debt is reckless irresponsibility. I guess he just says whatever is convenient though.

    See ya.

  22. Macro 23

    Hey!! Its easy it only costs 20 bucks – thanks for the link! I feel much better now.

  23. Why would I agree with Cullen? He’s just politicking – but he’s still a better FM than Key or English will ever be…

    edit – shit Macro – that was a joke! Now I feel really really stink…

  24. Macro 26

    I’m just sortta wondering if I have to vote for them now?

    captcha : factories sell!!

    Sell Sell Sell!

  25. Pat 27

    Ianmac wrote “I checked the tax advantages for my neighbours in view of John Key promising $50+ coming in tax relief. It seems I got it wrong. I looked up, for instance the tax relief for a couple with 2 children and an income in $20,000 to $36,000 bracket.
    In 2009 they get no improvement to their income under National tax package”.

    Ianmac – why are your neighbours earning less than $36K? Have you given them some advice as to how to find a better job or jobs? Instead, you expect them to stay on the same incomes in the next 3 years?

    Sorry folks, but minimum wage for a 40 hour week is $25K. So a couple should be earning at least $50K between them if their kids are at school. This is before the extra money they will get from Working for Families.

  26. the sprout 28

    Last time I noticed Key seemed to take pride in his Risk Taker image, most notable in recent times with his announcement that NZ First was permanantly off the menu. Well this as their major (some would say only) policy platform, this one is mighty risky tack for National.

    Of course in the current climate Key will be bending over backwards to nolonger look like a risk taker.

  27. Pat. That assumes both are able to find fulltime work while raising kids. Pretty dumb assumption.

  28. the sprout 30

    i wonder if they got these guys to do the ‘research’ for the policy?
    http://www.newswire.co.nz/2008/10/eta/

  29. Paul Robeson 31

    Sorry guys, didn’t read through the thread apologies if this has already been brought up but the EMA summary is wrong.

    EMA says R & D loss bad, Kiwisaver they are positive about the changes. Or if they have negative thoughts they keep them to themselves.

  30. Paul – you’re right, I was skimming and saw ‘…find Kiwisaver credits a bit loss’ and missed ’employers won’t’

  31. Dom 33

    The New Zealand Herald is still reporting that $48,000 is an average wage:

    “Mr Key said a worker on the average wage of about $48,000 would be better off”
    http://www.nzherald.co.nz/nz-election-2008/news/article.cfm?c_id=1501799&objectid=10536380

    The Dominion Post also still has it wrong:

    “National will deliver tax cuts worth $47 a week to workers on the average wage of $45,000”
    http://www.stuff.co.nz/vote08/4720318a28435.html

    [the average wage is something in the late $40,000s ($47,000 last I saw) but it’s a silly yardstick if you’re wanting to find out how the typical Kiwi is affected. The best ‘typical Kiwi’ approximation has got to be median income for all adults – $27,000. Half of Kiwis have incomes within $15K either side of $27K. SP]

  32. Simple (renamed RC) 34

    Wow, unions oppose national policy. how is that news? Im off to a strip club to spend my tax cuts

  33. Lampie 35

    yay under National, I’ll be on welfare because of a ‘individual rebate’ 🙂

    TOTAL WELFARE STATE GOOOO NATIONAL

  34. vidiot 36

    So SP would classify a person who has an annual income of $94K as a ‘Rich Prick’ ?

    A] Probably Yes.

    So if you had a Kiwi family earning the same family income [94K, 2 x 47K average], you would consider this to be ‘average NZ’ and all AOK ?

    A] Probably Yes

    So why is it that a single income family, get’s tarred with the ‘Rich Prick’ moniker when they are in the same boat as the ‘Working Family’ ?

    Is that a double standard ?

  35. rolla_fxgt 37

    SP, yes I see where you’re coming from now & apoligise if any offence taken.
    But I still have an issue with that first stat, which has been played out in a few others comments after mine. Namely that some of those stats double count (I’m unsure if stats NZ account for this or not, so I may be barking up the wrong tree), as for example I’m a student, and I work part time & earn approximately $13,000 a year for my meagre effort, so I get counted in the student total, and the low earners total. Now to me this seems odd, because surely when trying to work out the wealth of earners, and the median wage, we should look only at those who work full time (35 hours or more a week), as of course those who are only part time will have a lower yearly salary, unless they have some ridiculously high paying job, in which case they’re very lucky.
    I know you may not be responsible for the stats, or even agree with the way they’re calculated, but to count those that willingly work only part time distorts the figures by dragging them down.

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