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.