Tax ‘cuts’ essential

Now that a sizeable cash surplus has been announced there has been a lot of conjecture about what should be done with this surplus and potentially future surpluses.

There have been calls for more spending on the police, on education, on health, and on the poor. Probably about ten times as much expenditure as surplus, but opposition parties can get away with that.

One very contentious issue is whether there should be tax cuts or not. National have been saying they would like to cut taxes further for years.

I think at least modest tax cuts are essential – not actually cuts, but reinstating tax rates that have gradually slipped away through bracket slippage.

One reason why Helen Clark’s government (with Michael Cullen as Finance Minister) ended up getting rejected by voters was due to growing annoyance that effective tax rates had gradually increased during buoyant a financial time period. We were gradually taxed more, and Cullen was too late to react.

National have been constrained by deficits, until now.

They should at least change income tax brackets to adjust for wage inflation, so we are at least back to where we were in 2009.

Tax brackets should be indexed to wage inflation and adjusted regularly, otherwise they will continue to be used as tax increases by stealth.

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23 Comments

  1. Strong For Life

     /  16th October 2016

    Tax cuts, vulnerable children and increased DOC funding would be my preferred options.

    Reply
  2. Corky

     /  16th October 2016

    I would prefer a point of sale tax. Scrap every other tax.

    “One reason why Helen Clark’s government (with Michael Cullen as Finance Minister) ended up getting rejected by voters was due to growing annoyance that effective tax rates had gradually increased during buoyant a financial time period. We were gradually taxed more, and Cullen was too late to react.”

    That is the hallmark of socialism. David Lange spoke words to this effect: ” its about distracting them so you can slip your hand into their pockets.” Cullen’s parsimony was a major reason Labour lost power. Cullen always promised jam tommmorrow, but never today.

    Reply
    • Kitty Catkin

       /  16th October 2016

      The problem with point of sale tax is, I seem to remember, that it’s so fiddly to run.

      Labour now seems to promise jam yesterday as well as tomorrow. Taxes are a fact of life, I’d rather pay taxes now than have to find the cost when I go to hospital. I have no idea what my late husband cost at the end of his life by way of medication alone-and many people have far more.

      It seems that many people want to have more money spent by the government but don’t want to give the government the money in the first place.

      Reply
      • Corky

         /  16th October 2016

        I’ll give you quote of the day for your comment:

        “Labour now seems to promise jam yesterday as well as tomorrow. ”

        That is an all-time classic….meow.

        Reply
  3. David

     /  16th October 2016

    “Tax brackets should be indexed to wage inflation and adjusted regularly, otherwise they will continue to be used as tax increases by stealth.”

    Which is why they won’t be indexed to wage inflation. No government is going to forgo a painless and silent way to steadily increase revenue. They can either spend it on their vested interest groups, or give it back to their vested interest groups, with a suitable fanfare of course.

    Reply
    • Kitty Catkin

       /  16th October 2016

      Oh-so it’s not the government who pay for schools, roads, hospitals, WINZ, superannuation….my mistake. Thank you.

      Reply
      • David

         /  16th October 2016

        This is my point exactly. Why would they forgo a way of increasing revenue that can be translated into a new headline about more spending on schools, roads, hospitals, WINZ,superannuation….that does not also have a headline of increasing taxes.

        Reply
  4. Zedd

     /  16th October 2016

    its just English trying to assure the 50.1% that they will get tax cuts in 2017, even if the other 49.9% dont get anything !!

    Any ‘cash surplus’ should be put into benefiting ALL kiwis, not just ‘team Key’ voters 😀

    Reply
    • Zedd

       /  16th October 2016

      “mind the GAP, folks”

      Reply
    • Corky

       /  16th October 2016

      Speak for yourself, Zedd. I want money, and I want it now, like so many other middle-class latte slurping wannabies.

      Reply
    • PDB

       /  16th October 2016

      A bit hard offering ‘tax cuts’ to people that don’t pay any tax………

      Reply
      • Corky

         /  16th October 2016

        Damn fine point, PDB. Always look after the productive first..

        Reply
        • PDB

           /  16th October 2016

          In saying that I don’t believe we need a tax cut at the moment………..law & order, health & paying down debt in that order.

          Reply
          • Corky

             /  16th October 2016

            Hmmm… I take it you are living the middle-class dream like the Hosk, and can afford to practice altruism. While honesty would demand I agree with you, greed reminds me it costs a lot to get married in the Cook Islands.

            Reply
      • @ PDB – “A bit hard offering ‘tax cuts’ to people that don’t pay any tax………”

        This can be rephrased: A bit frigging unfair offering tax cuts to the rich people who don’t pay any tax or pay very little proportionately …

        Reply
  5. Well the beneficiaries got $25 bucks extra a week. MP’s get regular boosts. What about the average Joe? Shouldn’t he get something as well. Tax cut please.

    Reply
    • Corky

       /  16th October 2016

      You leaded that one right between the eyebrows, Arty.

      Reply
    • @ arty – a highly selected few beneficiaries got $25 bucks extra per week after 25-odd years of nothing but inflation adjustment following Ruthanasia’s rabid Rightie welfare cuts and, what’s more, with fairly severe conditions attached, creating more punitive welfare and more bureaucracy to enforce the terms and conditions …

      The Average Joe, as I understand it, gets a pretty good deal from WFF, to the point where Righties on here regularly complain that Avrage Joe effectively pays no tax at all …

      So, let’s face it, we’re talking about tax cuts for the rich and, according to numerous sources, many rich avoid paying their alotted share of tax. Some earn millions and hone their “income for tax purposes” down to $70K, according to Gareth Morgan, who admits doing so himself …

      What’s needed is a massive overhaul of the entire financialised political system …

      I remember the days when what I earned paid for what I needed, for considerable discretionary spending and allowed for some saving too, despite higher income tax rates than now, without any subsidies and benefits … admittedly, I didn’t have dependants … but lo, they were the days you folks call ‘socialism’ … Go figure …

      Reply
  6. aWanderer

     /  16th October 2016

    Politically untenable not to offer tax cuts prior to the next election but the world is a dangerous place so knocking back the debt makes strategic sense.

    Reply
      • People talk about the opposition never acknowledging or backing good government policies. How about this –

        “John Key and his Government know very well that the reason they have managed to bring the economy through a recession and earthquakes in good shape owes just about everything to the very low debt left by the previous Government.”

        Credit where credit is due …

        “We have to hope the next economic “shock” does not happen before 2020 …”

        Oh yes we had …

        Reply

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