Steven Joyce on tax cuts

Finance Minister Steven Joyce has given some indications of Government thinking on tax cuts (in election year).

Stuff: Joyce signals low and middle earners’ top rates target for tax cuts

Finance Minister Steven Joyce has signalled that cutting the top tax rate paid by lower and middle income earners is his top priority for tax cuts.

In a speech to the Auckland Chamber of Commerce on Thursday he said it was still too early to be sure that a surplus will be achieved in the current financial year, particularly given the costs associated with the Kaikoura earthquakes.

Treasury revealed on Thursday  that the books were in surplus by a narrow $9 million in the first six months of the current financial year – almost $700m ahead of forecast.

He was concentrating on four key areas for his first Budget on May 25.

They are:

  • better public services for a growing country,
  • building the infrastructure a growing modern economy needed,
  • paying down debt “as a percentage of gross domestic product”
  • reducing the tax burden “and in particular the impact of marginal tax rates on lower and middle income earners, when we have the room to do so”.

The Government has let bracket creep effectively increase tax rates for all income earners over the past eight years – something Michael Cullen eventually got hammered for by voters in 2008.

One could be a bit cynical about now offering to address this in the first election after John Key’s exit.

Once, twice, Thrace

James Thrace posted this twice at The Standard wanting comments on it, so thrice might hive him some more feedback.


At present, we are seeing the long con strategy being utilised by National. Merkel’s Germany has been doing it to good effect.

How to do the long con.

1) Soften up the electorate as much as you can whilst retaining as many of the core policy settings that enable society to function (even while cutting funding left right and centre). This means temporarily swallow the dead rats.

2) Make the same soothing noises each time so as not to spook the horses.

3) Utilise the lack of MMP understanding to your advantage knowing that by and large, most voters don’t really care about the ins and outs. It suits National for voters to just know the ‘high level’ overview which is “vote for this party, and vote for that person”.

4) Incrementally, and surely, keep hammering home the same message of being “sound economic managers” and portraying the opposition as a bunch of inept muppets.

5) Constantly belittle any brainfart or policy ideas that erupt from those quarters.

6) Make any issues that crop up during your governing period anyone else’s fault but your own. Blame your support parties. Sheet home all responsibility to them (RMA delays = blame Maori party, Party Drug/Marijuana issues = blame Peter Dunne)

Once achieved, and the same message has sunk in, it’s odds on proof that the electorate is softened up and all the ducks are in a row, so now you can go hard.

Sell one message, and one message only.

Tax cuts, tax cuts, tax cuts.

Play to peoples wallets because 9 years of constant tax rises means people are poorer. Everyone is sick of hearing the same things – housing crisis, unclean water, mass sell offs of land etc.

Tax cuts, tax cuts tax cuts.

The majority do not care. The majority want more money to continue to obtain the things to buy to make their struggling, and probably miserable existence somewhat better. Consumerism has taught us all “feel down, buy junk, feel better.”

Tax cuts, tax cuts, tax cuts.

The majority listen, their ears perk up. More money say they! More money indeed say National.

Tax cuts, tax cuts, tax cuts.

9 years in power with constrained control under MMP, in order to keep selling yourself as the “long term” government is nothing. All people hear now are tax cuts. No one hears anything else. All talk of “30 new taxes since 2008” is ignored.

Tax cuts, tax cuts, tax cuts.

Overwhelmingly, the majority will vote for what’s good for their wallets. 9 long years of constantly struggling to get by and seeing more of your pay disappear each week means tax cuts will be a boon..

Tax cuts, tax cuts, tax cuts.

The opposition decries, “no, we can’t afford”. Shut up say the proletariat ‘You’re not the government, how do you know what we can afford. That John Key is such a nice guy’

tax cuts, tax cuts, tax cuts.

The masses hunger. They want these tax cuts. Nothing will stop them now from getting them. The party offering the message, simply, must. WIN!

Election day looms near. The repeated mantra of ‘tax cuts, tax cuts, tax cuts’ has assumed a soothing quality to the soma’d masses. No one wants to be a Delta, or an Epsilon. We all want to be Betas. Only the best can be Alphas. Being a Gamma wouldn’t be too bad, but a Beta is better.

Tax cuts, tax cuts, tax cuts.

Election day itself

Party vote “tax cuts” say the masses. The dutiful tick goes to the party with the right message.

After 9 long years of softening up the hoi polloi, the governing party is returned with an outright majority. Too late, the people awaken. The look of horror is abject. The next three years is a selloff. Too late, the damage is done, the plan is to be carried out. The bankers and merchant men took over the country.

New Zealand. The greatest experimental country for neo-liberalism to mass transfer and consolidate wealth to the few, since, well, ever.


There are comments on it here:

Key on tax cuts and family package

John Key was interviewed on The Nation this morning and was asked what he was likely to do next year regarding tax cuts, taking into account things like the cost of the Kaikoura earthquakes.

Newshub summarises in Key: Families first in line for tax cuts

Simply cutting tax rates or lifting the thresholds at which higher rates kick in wouldn’t be “fair to everybody”.

“If you lower the bottom rate, you give it to everybody at the top and it costs a fortune,” he explained.

“Whereas you might be able to do some integrated family package… which delivers fairness to everybody but a bit more meaningful at the lower-income end.”

But changes to income tax brackets haven’t been ruled out. Presently, the top rate of 33 cents in the dollar kicks in at $70,000. As incomes rise, more people find themselves earning enough to start paying the top tax rate.

“People are getting bumped into the top personal rate without doing too much,” says Mr Key.

Asked if beefing up the accommodation supplement was on the cards, particularly in areas where rents have risen sharply, Mr Key said: “That may well be right.”

He hasn’t yet decided whether any changes would come in Budget 2017 or used to woo voters in next year’s election campaign.

They would also play second-fiddle to the Government’s main priorities.

“The Government’s objectives are… One, grow surpluses. Two, repay debt. Thirdly, get debt to 20 percent of GDP – probably not much below that – by 2020,” said Mr Key.

“We’re on track to do all those things. Surpluses are rising, we think we’ll be under 20 percent of GDP. That’s the advice we get from Treasury.”

So it sounds like there may be some modest tax adjustments to address threshold creep but more targeting of low income families and less tax cuts for people with higher incomes.

Earthquakes, tax cuts and crazy politics

Politics generally kept away from the earthquakes last week but parties have gone plain crazy on them now.

John Key said from Peru that tax cuts may be still in the mix of Government policies offered in next year’s election bribes – see ‘Tax and family’ package planned.

Andrew Little has responded saying that talk of tax cuts was ‘plain crazy’.

But both Labour and Greens have come out in support of expensive sounding housing policies.

NZ Herald: Key says earthquakes could dent Government options for tax relief, but not forever

Key said the cost of the earthquake and resulting economic conditions could affect the Government’s ability to offer tax cuts in the short term “but probably not in the medium term.”

That suggests that any “tax or family package” as he termed it, might be promised in the 2017 Budget take effect only if National wins a fourth term.

Key was answering questions at Apec in Peru about the cost of the earthquake and its affect on income tax cuts.

Key was responding to questions asked by media.

Labour leader Andrew Little said talk of tax cuts was “plain crazy” when debt levels were high, superannuation costs were rising and the government had the cost of the disaster to meet.

Little said that to suggest there was still some room for tax cuts show that Key was out of touch.

Greens co-leader James Shaw said any talk of tax cuts was “weird” when the damage was still being assessed.

So Key should have refused to answer questions about possible tax plans in relation to substantial earthquake costs?

The unknown costs of the earthquakes hasn’t stopped Labour and Greens promoting the spending of more money.

On Saturday Metiria Turei announced:

Green Party launches plan to get more low-income Kiwis into their own home

Green Party Co-leader Metiria Turei has today launched a progressive ownership plan to provide up to 10,000 new homes for lower-income Kiwis to own, and to empower community housing groups with new financing models to help fix the housing crisis.

“Up to 5,000 new, energy efficient homes will also be available for the community housing sector to purchase using progressive ownership.”

That will presumably cost a substantial amount of money.

Also on Saturday Labour backed the Greens housing spending policy:

Green policies support Labour’s housing plan

The Green Party’s housing package is a welcome complement to Labour’s plan to fix the housing crisis, says Leader of the Opposition Andrew Little.

“The Greens’ rent to buy scheme complements Labour’s KiwiBuild policy to build 100,000 affordable homes for families to buy.

And yesterday Green MP Jan Logie: Govt needs to make funding more available for children with disabilities

So it’s ok for the Labour and Green parties to promote policies involving more spending but Key is crazy for responding to media questions about tax cuts as a part of a ‘family package’?

Who is out of touch?

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No tax cuts “the right move”

Bill English praised by the Greens? Yep, when he signalled there would be no tax cuts after all this year, and neither next year, election year.

Less surprisingly English was criticised by David Seymour and the Taxpayers’ Union.

ODT (from NZH): Takes on tax adding topsy-turvy twist to Budget 2016

Mr English effectively called off tax cuts for this year and next year.

Instead, he would pay off debt.

The Greens were quick to report Mr English had “made the right move”.

There is some sense in paying off more of the huge amount of debt accumulated over the past decade.

On the face of it, it looked like a broken promise.

National wafted the scent of tax cuts during the 2014 election campaign.

The reasons Mr English gave for changing tack were fiscal.

He traded in tax cuts for debt, for infrastructure spending and for boosts in health and education to help pay for surging population growth.

The stronger reason for scrapping the tax cuts are political.

Tax cuts can be popular, but there was hardly a clamour for them. In 2008, that appetite may have been there.

There was an appetite for tax cuts in 2008 after Michael Cullen had allowed taxes to gradually increase through bracket creep while the Clark government dished out billions of dollars to some people through interest free student loans and Working For Families handouts.

There is less pressure on tax cuts now in part because everyone who has a mortgage or a bank loan is enjoying record low interest rates.

Green finance spokesperson Julie Anne Genter: Taking tax cuts off the table the right move

Taking more tax cuts off the table was the right move for Bill English to make in his pre-Budget speech today, the Green Party said.

“It’s good that the Government has realised that tax cuts aren’t the kind of medicine our economy needs right now,” Green Party finance spokesperson Julie Anne Genter said.

“National’s tax cut bribes have historically benefitted people on high incomes, and come at the expense of fixing problems like child poverty and the housing crisis.

Not everyone is happy. The Taxpayers’ Union said National’s low tax policy was “a sham”.

David Seymour: No tax cuts, no spine

ACT Leader David Seymour is disappointed in the Government’s refusal to cut taxes this or next budget.

“Abolishing corporate welfare would have given the Government an opportunity to cut taxes”, says Mr Seymour.

“Under this Government, corporate welfare has risen to $1.344 billion a year – a cost of $752 per New Zealand household.

“These handouts have included payments for sheep given to a Saudi businessman and a boat-building company owned by the world’s seventh-richest man.

It depends on what is dished out in the budget later this month as to whether voters in general will accept that reducing debt – plus a bit of extra spending – is more important than reducing tax rates.

It could also be that English and John Key are wary of the possible political reaction to tax cuts when tax is a very topical issue. “Tax cuts for the rich” (it’s difficult to cut taxes without including higher earners) is a slogan that is already being aired extensively.

Oh, and what is the Labour reaction? I can’t find anything on their website but I managed to find a tweet:

Bill English flip-flops today on tax cuts worthy of Olympic gym selection, but I’d put money on them being waved about in election campaign.

Nothing about whether Robertson thinks it’s good or not, no analysis, no alternative, just a diss for now and a diss for the future.

Free education versus tax cuts, or…

Today’s Herald editorial suggests Free tertiary study may trump tax cuts.

In past years, this Government has started with unexpected announcements – an asset sales programme, a school leadership initiative and a flag change exercise. This time, the most surprising item in John Key’s speech was an indication tax cuts are still on the horizon.

That was surprising because National’s prospective tax cuts provide the fiscal justification for Labour’s big new year proposition: free tertiary education.

If National wants to argue at next year’s election that an entitlement to three years’ free tertiary education is unaffordable, it cannot be offering tax cuts. If it thinks a tax cut will be more appealing to voters than relief from student fees and loans, it may be mistaken.

There may be more pressing social needs for any spare revenue, but few would be as popular.

But in eighteen months time there’s likely to be more policies in the campaign mix than free tertiary education and tax cuts, from both Labour and National.

Labour are promising much more, especially from their ‘Future of Work’ focus.

National have been light on policies, preferring to campaign on their fiscal competence, but they are likely to announce something significant probably at the start of next year.

And there have been hints of something else from Key – addressing poverty related issues especially related to children.

Last year Bill English announced the first benefit increases for decades, and these kick in this year.

I think there’s a good chance that this  year’s budget will provide something significant for children, possibly timed to kick in next year prior to the election.

Free tertiary education that will mostly benefit better off adult New Zealanders versus something significant for struggling kids?

Note that National have already increased early childhood education options. Those who have failed in education by the time they reach their teens are unlikely to go to university.

Labour seem to be trying to repeat their 2005’s successful university education bribe via interest free student loans. Public concerns have moved on from then.

The future of kids may be a strong election policy next year.