Seymour highlights tax bracket creep

ACT MP David Seymour has highlighted the problem for taxpayers caused by bracket creep. If PAYE brackets aren’t adjusted then inflation means taxpayers gradually pay more tax relative to their income.

Michael Cullen failing to address bracket creep for nearly all of the three terms under Helen Clark was a significant factor in voters getting fed up with Labour.

Stuff reports in Politics briefs: March 20, 2015

ACT revives ‘bracket creep’ campaign

They were last seen in Michael Cullen’s “chewing gum tax cut” Budget – and later dumped – but ACT has revived calls for tax thresholds to be indexed to inflation. Leader David Seymour says average households are more than $1000 worse off in tax payments since 2010 because of “bracket creep”. Had thresholds been linked to inflation, the top 33 cent rate would now cut in at $73,571, not $70,000.

If Bill English ignores bracket creep voters may get fed up with his tax grabbing too.

Seymour’s press release: Time to end stealth tax increases

ACT Leader David Seymour has today called for an end to the stealth increase of tax rates through bracket creep.

“Each year, inflation pushes a larger proportion of New Zealanders’ incomes into higher tax brackets, regardless of whether they’ve had an increase in real earnings,” said Mr Seymour.

“Tax brackets should be adjusted for inflation.

“Even with low inflation this stealth tax of ‘bracket creep’ means that the average household is $1036 worse off since the tax changes of October 2010. An individual taxpayer on the average income is $648 worse off.

Mr Seymour’s focus on bracket creep comes after the Minister of Finance stated low inflation ‘makes it more challenging for the Government because higher inflation pushes up the tax base and enables us to collect more tax in a growing economy’.

“If the government wants to increase taxes, it should do so openly. This is a basic principle of transparency, and honesty in taxation.

“I propose tying tax brackets to the Consumer Price Index, meaning tax brackets would rise with inflation, stopping stealth tax increases and ensuring government revenue collection is open and transparent.

“The best time to act is now – current low inflation means a switch to inflation adjusted tax brackets would have relatively little effect on government forecasts.”

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2 Comments

  1. alloytoo

     /  20th March 2015

    Of course if English tries to address bracket creep he will be accused of giving tax breaks to “rich picks”.

    Reply
    • Yes, that’s a certainty. When I get time I’m going to work out whether National’s tax cuts will have been overtaken by bracket creep yet or not. Probably do that on Monday.

      Reply

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