The 50 cent tax cut

Written By: - Date published: 9:33 am, March 26th, 2008 - 11 comments
Categories: election 2008, john key, tax - Tags: , ,

This morning on Breakfast, John Key repeated his line that capping the size of the core public service (that includes planning staff for health, prison guards, and the human rights commission) at current levels would ‘save $500 million over three years that could be used for more ‘frontline’ staff and tax-cuts’. Leaving aside that it’s not really a ‘saving’, just a theoretical diversion of future revenue increases, how much of a tax cut is that?

$500 million over three years is $166 million a year. If half goes to ‘frontline’ staff, that’s $84 million a year for tax cuts. With 3.2 million taxpayers, that’s $26.25 average each a year (in reality it would be less for most people, National’s tax cuts always go mostly to the well-off); 50 cents a week.

For 50 cents a week, I would prefer to have a well-staffed public service.

11 comments on “The 50 cent tax cut”

  1. Steve Pierson 1

    incidentally, that figure of 3.2 million taxpayers comes from this treasury page, , which is a goldmine of such info

  2. John 2

    Yeah, I can’t get my head around where the Nats are going on this. Their two big policies for the coming election campaign seem to be tax cuts and cutting the public service.

    Key seems to be making statements like the one Steve points out to make us think he can afford the tax cuts without cutting government services that matter to the average voter. Isn’t this just the beginning of the old right-wing trick of creating a crisis that then provides cover for parties like the Nats and ACT to implement their long term conservative agenda?

    I mean, if you cut the funding for the back of house people in say the Ministry of Education – those who write the cheques for the schools, who help schools recruit teachers, who assess a school’s request for funding for new classrooms, etc – doesn’t that only serve to run down our schools? And, when you add in the large tax cuts the Nats are planning won’t that create a situation where we start running deficits again?

    This would then provide the crisis in education that would allow them to justify deeper cuts in the education budget and with schools run down the public would feel less inclined to support the public education system. Next stop vouchers and more public funding for the private schools.

    A wacky conspiracy theory? One might say that, but didn’t Bill English use a fiscal crisis in the late 1990s to justify a cut in the sacred cow – superannuation?

  3. Steve Pierson 3

    and, surprise surpise, while cuting super, National found it also had money to reduce the top tax rates.

  4. Monty 4

    How much has the public service grown over the past 9 years again – how many staff and what is the % increase?

    Huge increases – and I understand that even now they are 15% short of the target (ie can grow even more) and where are the positive outcomes?

    I have no problem with a cap on the number of Public Servants – and so much the better if there is a reallocation of say Public Servants to the front line which is what John Key has advocated. Outside o Wellington please show me a person who thinks we need even more pblic servants. Maybe that is why National controls all the provinces already.

  5. randal 5

    hi monty…I promise to give you $100 a week if you vote for me and pigs can fly too!

  6. John Fouhy 6

    That 3.2 million tax payers does include 200,000 with a taxable income of “Zero”..

    And averages are always dangerous things to use in isolation. What if we take the whole 166 million and divide it based on percentage of tax paid?

    Those earning $150k pay 16% of the tax. 16% of 166m is 26.5m. Divide that amongst the 45,000 people in that band, and I get $590/year, or half that if we use $83m/year.

    (and I’m sure that’s still not actually how the money would end up distributed..)

  7. Steve Pierson 7

    So, John, with your income of $150,000 (incidentally, half of kiwis have to life on less than a sixth of what your income), would you rather have $5 a week, which would increase your net by 0.25%, or a well-funded public service?

    Would everyone else happy with John and his mates on $150K, who make up 1.5% of taxpayers, taking over half of the cash avialable for tax cuts?

    That would leave the rest of us with tax cuts of 25 cents a week. I’m putting mine in stocks.

  8. Graeme Edgeler 8

    I’m not certain, but I think John’s use of the phrase “I get” meant “I calculate”.

    [you’re quite right, as ever, Graeme. sorry John. That said, I stand by the point that a tax cut on proportion of cut contributed would give bugger all to those very wealthy on 150K and less than bugger all to the rest of us. SP]

  9. higherstandard 9


    I think Graeme is correct about John F’s post and regardless as someone in the tax bracket you’re having a go at let me comment.

    I support a well funded Public Service. If there was a choice between a well funded public service and tax cuts I would opt for a well funded Public Service.

    There is however a significant difference between a well funded and a bloated Public Service as demonstrated in the National’s Nanny State Post

    I think most people are happy with a well funded public service if that means adequate funds for Health, Education and similar public essentials. Unfortunately the Public Service in NZ has become synonymous with rising numbers of state servants in Wellington producing ever increasing reports and statistics with little meaning and attending neverending Hui

  10. Steve Pierson 10

    “Unfortunately the Public Service in NZ has become synonymous with rising numbers of state servants in Wellington producing ever increasing reports and statistics with little meaning and attending neverending Hui”

    the problem with this is it’s just empty assertion.

  11. higherstandard 11


    The truth is somewhere between Key and Cullen however I would stand by my reading of the general public perception.

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