Tax cuts are the right wing’s favourite answer to every question. Before the election, National were promising us that tax cuts were the key to economic growth:
Key: “National will deliver an ongoing programme of personal tax cuts. Fundamentally, National believes in the growth-enhancing power of tax cuts. Labour does not.”
English: “… all the literature tells us, all the analysis tells us that reducing the higher tax rate is the most growth enhancing tax cut you can make.”
Tax cuts were the centrepiece of Nationals economic plan for NZ:
Key: Tax cuts are a top priority for National. They are an essential part of our five-point plan for the economy to make New Zealand a wealthier, more successful country.
This was reiterated after the election in the “speech from the throne”:
Key: My government will therefore, in representing the will of New Zealanders, remain resolutely focused on the issues that matter, pre-eminent of which will be the need to strengthen the economy to ensure future economic growth.
This programme of tax reduction is a central part of the economic plan of my Government, because it believes in encouraging New Zealanders to get ahead under their own steam, and it views personal tax reductions as an essential step in ensuring that can happen.
That’s all pretty clear isn’t it? So why did National, in the recent budget, cancel the their tax cuts? If tax cuts lead to growth, and growth is what we need, why throw away the centrepiece of your economic plan? Why cancel tax cuts?
There can be only two possible answers. One, National has gone mad, and no longer wants to grow the economy. Or two, National knows that tax cuts do not lead to growth and therefore there is no reason to keep them when they have become unaffordable.
In short, if National really believed their own rhetoric they would have kept tax cuts at all costs, because they would have caused growth and paid for themselves many times over. But they didn’t, because they know it’s all a lie (e.g. here, here, here). All their pre-election promising and posturing on tax cuts was just empty rhetoric, and in cancelling the cuts National have just admitted it.