National has released its tax policy. At first glance it appears the top rate will be reduced to 37% by 2011, giving the rich thousands of dollars in tax cuts. People earning $24-50k who aren’t getting Working for Families will get $15 a week rebate by 2011. Working families will basically get nothing, except for a 1% tax cut in three years’ time.
The package will be paid for by gutting Kiwisaver – the employer contribution will be essentially scrapped as Key halves the minimum contribution and forces workers to pay for it out of their own wages anyway. This will obviously have a huge impact on the savings rate and the future domestic capital base New Zealand businesses need to grow and pay higher wages. Stunningly, the research and development tax credit will also be scrapped.
Medium-term, Key says he wants to reduce the top tax rate to 33c for people earning $50,000 or more. This will lead to a massive growth in inequality in a country already marked by obscene disparities of wealth.
I honestly can’t believe this policy. I knew National were right-wing, but I thought they had more political sense than this. With today’s tax announcement, the ‘sensible centrist’ facade is over.