Facts on tax cuts/increases

The tax debate has ramped up a few notches, with National claiming Labour will increase income tax, and Labour claiming that National is lying.

Here are the facts.

Announced in the budget in May: IRD Budget 2017

From 1 April 2018, the $14,000 income tax threshold will increase to $22,000, and the $48,000 threshold to $52,000.

The tax threshold change provides a tax reduction of $10.77 a week to anyone earning more than $22,000 per annum, increasing to $20.38 a week for anyone earning more than $52,000 per annum.

That is clear, legislation has been passed, and unless legislation is changed again those tax cuts for everyone will take effect from 1 April 2018.

Labour:  Fact Check: Income taxes

National loves to scaremonger about tax increases. If you listen to what they say, you’d think Labour was going to tax everything that moves!

They’re wrong. We’ve been very transparent about all of our policies and plans, and we will continue to be so.

We’ve decided to cut through National’s spin. Click on any of the below issues to find out the full story:

Will you raise income taxes?

Jacinda has ruled out income tax increases this election.

Labour: Labour’s Families Package

Now is not the time for tax cuts. The top 10 percent of income earners get $400 million from National’s tax cut, which is as much as the bottom 60 percent receive combined.

Jacinda Ardern, Grant Robertson and other Labour MPs have repeated “the top 10 percent of income earners get $400 million from National’s tax cut” frequently. They don’t mention that all income earners will benefit from the tax cuts.

So Labour will eliminate National’s tax cuts, saving $1.5 billion a year.

From those numbers the ‘bottom 90%’ of income earners will get a total of $1.1 billion in tax cuts per year.

Labour would need to pass legislation that changes the tax rates currently in place to take effect from next April.

The terminology being used is “Labour will eliminate National’s tax cuts” but also “Jacinda has ruled out income tax increases”.

To National – their latest PR on this from Minister of Revenue Judith Collins: Labour would put up income tax for average wage workers

“Labour is simply factually wrong – they would force someone on the average wage to pay $1060 a year more in tax,” Ms Collins says.

“Labour needs to be upfront with New Zealanders. Under Labour income tax is going up.”

Strictly speaking that is inaccurate. Under Labour income tax won’t go down.

So both Labour and National are playing with words.

But, however you phrase it, if Labour get the support of a majority in Parliament to eliminate the tax reductions currently in place the income earners will be taxed more than if National stay in Government and don’t change the legislation.

Under Labour all income earners will pay more tax from next April than they would under National.

I’m not sure that’s something that Labour want income earners to understand and ponder when they decide to vote, so they are unlikely to win this war on words. They have certainly lost a battle by being drawn into debating it.

35 Comments

  1. Corky

     /  September 14, 2017

    Enough said…unless you are Blazer.

  2. Blazer

     /  September 14, 2017

    National are being dishonest unless you think it is acceptable to introduce a raft of deferred legislation prior to being elected.

    • High Flying Duck

       /  September 14, 2017

      “A raft of deferred legislation” – or enacting the budget as is done every year – and with the support of ALL parties except Labour.

    • David

       /  September 14, 2017

      I would have thought you Blazer would be a big fan of 1.1 billion dollars going to the hard working people of this country.
      Labours “families” package gives 3k to most new parents and that includes the top 10% so National are also taking money away from well paid lawyers and accountants.

    • Pete Kane

       /  September 14, 2017

      Labour releases full tax plan after National attacks (10.30)

      “Labour has pulled a major reversal in how it would carry out its proposed tax plan, in an attempt to counter National’s continued attacks.
      It now says any recommendations from its tax working group would not be introduced until 2021, which means voters would have the opportunity to reject any new taxes in the 2020 election.”
      http://www.msn.com/en-nz/news/national/labour-releases-full-tax-plan-after-national-attacks/ar-AArToXb?ocid=spartanntp

        • PDB

           /  September 14, 2017

          “It now says any recommendations from its tax working group would not be introduced until 2021, which means voters would have the opportunity to reject any new taxes in the 2020 election”.

          Which still means a water tax, emissions tax on farmers, regional fuel tax, visitors tax and an income tax increase by removing the National tax cuts that are now law.

          • Patzcuaro

             /  September 14, 2017

            Let’s just take the regional fuel tax, do you live in Auckland which is where the regional fuel tax is proposed? Is the traffic better since the SW link has opened?
            We live NW of Auckland and usually like to get out of Auckland by 3pm to avoid congestion on the NW motorway. We were on the NW at 4pm last week and didn’t stop at all with traffic free flowing.

            All this has to be paid for some how. We send maize into Mt Wellington so the trucks go down the NW motorway and on to the Southern till Mt Wellington. In the last 10 years the trip time has increased by about 30 minutes which is a cost to me.

            If you go out into the rural areas of NZ people are probably already paying 10c a litre more for petrol anyway. Your choice increased congestion or a fuel tax to speed up implementing solutions to the congestion in Auckland.

            What has National done about it except sit on their hands.

            • PDB

               /  September 14, 2017

              “We send maize into Mt Wellington so the trucks go down the NW motorway and on to the Southern till Mt Wellington. In the last 10 years the trip time has increased by about 30 minutes which is a cost to me.”

              How is taxing commuters to have a tram running from the city centre to the airport going to help this situation? In fact your congestion costs will be the same plus you will pay a congestion tax on top for the privilege of doing so.

              National’s East-West route and alternative Southern Motorway will actually help.

            • Patzcuaro

               /  September 14, 2017

              Doesn’t worry me which infra structure projects the money is used on as long as it gets things moving. Doing nothing is not an option. If the East-West route will free things up use it on that. I’m not against a regional fuel tax if it gets things done.

          • Patzcuaro

             /  September 14, 2017

            What’s wrong with a visitors tax, we need money to make sure we are actually clean & green rather than just in the ads. Collecting it at the border is an easy cost effective way of doing it.

          • Patzcuaro

             /  September 14, 2017

            I don’t have a problem with a water tax especially on water bottlers, again it is money that can be used in the provinces to help live up to our clean, green image or is it just going to become a mirage.

            The provincial areas have smaller rating bases and bigger areas to serve and I imagine any new source of revenue would be gratefully accepted.

            When it comes to farmers I understand the tax is on water for irrigation. This would encourage farmers to use water more efficiently. Water is not an infinite resource and if farmers are irrigating it would suggest that there is insufficient rainfall to support their current practices. The intensification of agriculture has got to be having an effect on rivers & ground water.

            It will be an emotive issue for farmers as cash returns are often not that high. Land prices are rising often flowing out of the urban areas making it difficult for young farmers to buy land. The return on capital is often very low and can only be realised by selling. Would a land tax be better than capital gains as it will catch some of the gains that have already been made. A capital gains tax starts at a certain point and all gains prior to that are excluded.

            It sounds like Labour is going to defer the implementation of any tax until after the 2020 election which seems like a good idea. There are a number of issues in the taxation area that need to be addressed but thought needs to go into it and it also needs top dovetail into the social welfare area as well.

            What is National going to do, apart from get elected that is? After 9 years where is their leadership in these areas. They have been totally AWOL on the housing market. But of course the free market will take care of it, yeah right.

            • Patzcuaro

               /  September 14, 2017

              Anyway there is no free market in housing because of council regulations. In a free housing market people would be able to build what there want where they want.

              Diverging should people who aren’t citizens or residents be able to buy houses anyway when we can’t house adequately the people we already have.

        • PDB

           /  September 14, 2017

  3. Zedd

     /  September 14, 2017

    After the claims of $11.7bil hole in Labours figures was discredited by a raft of economists.. can we really believe any of Natz comments as anything but FEAR-mongering ?

    I heard that the latest claim is that under Labour, Akld rents will rise $20-40/week.. BUT a journo on RNZ stated that under the current Govt. house prices have rocketed, locking many out of the housing market & increasing rents by >30% in recent years.. much more than $40.. BUT hardly a mention of this in the rest of right-leaning MSM ?? 😦

    • Andrew

       /  September 14, 2017

      “BUT a journo on RNZ stated that under the current Govt. house prices have rocketed, locking many out of the housing market”

      Did they happen to mention that house prices went up under Labour (doubled in price) much more than they have under National?

      Thought not.

  4. Blazer

     /  September 14, 2017

    these are the sort of things National have implemented that affect..hardworking kiwis…
    National told Public Trust to scrap its free will service, forcing people pay big bucks to private lawyers get their wills done.

    Power prices have shot up since National sold parts of the power companies.

    Family Court changes that require parents pay $800 for mediation sessions before they can access a judge.

    Legal aid changes that make it available to only those who have next to nothing.

    Mass user-pays in education, with school charging for things that they never used to charge for and the government doing nothing’TS.
    and theres the 18 other taxes under National,of course.

    • David

       /  September 14, 2017

      Lawyers do wills for free no need for the taxpayers to fund this
      Power prices have been stable since the Brownlee reforms to generating assets unlike under Labour where we had an 88% increase and the SOEs were raped and stripped.
      The family court charges were to stop vexatious litigation that was detrimental to resolution of visitation rights, when it was free a parent could make up all sorts of allegations and drag things out.
      School fees have always been used, hell i was paying them 20 years ago for my two.
      The other taxes include the rises in tobacco taxes, booze taxes, petrol taxes and some user pays charges. It just cost me $141 to register my car that used to cost $287 and I dont need a WOF every 6 months.

  5. PDB

     /  September 14, 2017

    Labour have now just done a big U-turn on tax – Is it too late?

    • Blazer

       /  September 14, 2017

      could well be…both main parties are contouring their campaigns to poll results.

    • David

       /  September 14, 2017

      Yup. The shine came off Jacinda quicker than it did for Goff, Cunliffe, Little, Shearer…well it has for the voters but the media are still in the throes of Jacindamania.

  6. Ray

     /  September 14, 2017

    Blazer, if you were silly enough to get the Public Trust to do you a”free” will I really, really have a great deal for you!

    • Blazer

       /  September 14, 2017

      I told you…direct all ‘great’ deals…to Peter Thiel.12 DAYS is all it takes for citizenship,if you know the right…people.

  7. I think we are in woods and trees territory here. No ordinary voter can possibly analyse accurately the detailed interactions, and long-term ramifications of any party’s collection of policies. I believe the best a voter can do is try to decide which party they most trust to run the country efficiently for the benefit of most of us, then leave the details to them. We must be able to rely on the Opposition to keep them on their toes.

    One could argue that that is precisely what Labour is asking voters to do. However, they assume that because they expound a morally virtuous “vision of fairness for all”, we should uncritically accept that they are competent, materially, to deliver it. I am minded of my little daughter saying to me, on being told we couldn’t afford something: “Can’t you just write a cheque, Daddy?”

    Public trust in someone’s ability to shoulder a task as onerous and complex as running a country calls for more than just a pretty face and a determination to be “relentlessly positive”. Charisma is a useful quality in a pop singer, a game show host, or a political dictator, but it is not required of a democracy’s Prime Minister. In truth, it is safer and more beneficial in the Opposition Leader.

    • Blazer

       /  September 14, 2017

      until someone becomes P.M,they have no experience,same with Cabinet Ministers.Can I remind you of the Minister for Climate Change- P. Bennetts knowledge of Climate Change=NONE!The only lesson of the last 9 years is that National will always claim…the moral…low ground.

  8. Jay3

     /  September 14, 2017

    This morning Robertson over-rules Ardern’s captains call on tax policy. So, who is actually steering the Labour ship? Who’s in charge? Is Ardern just another Lange? The message sent at this late stage in their campaign is “don’t like our polices, don’t worry, we have others.” Whatever happened to that vision thing? So last week.

    • PDB

       /  September 14, 2017

      The real puppet master and backstabber of at the four previous Labour leaders…..

  9. PDB

     /  September 14, 2017

    • Corky

       /  September 14, 2017

      Yep, that’s why I’m not voting. I got got tired of kidding myself a new dawn is just around the corner.

      • PDB

         /  September 14, 2017

        Every vote counts Corky – as Leighton Smith said this morning ‘it’s not always about voting FOR someone, sometimes its about voting AGAINST someone’.

  10. Kathy Jarrett

     /  September 21, 2017

    You might want to change the date to 2018 for tax cuts where you have put 2017