Nats reshuffle the fiscal deck for 2017 tax cuts   8 Sep 2014

Article - BusinessDesk

Nats reshuffle the fiscal deck for 2017 tax cuts

By Pattrick Smellie

Sept. 8 (BusinessDesk) - The National Party has reshuffled its existing future spending and debt reduction commitments to prioritise "modest" tax cuts, worth perhaps $1 billion, which would be targeted to start from April 2017, ahead of the next general election scheduled after the one occurring this month.

The cuts would target low and middle income earners. While details are scant, Prime Minister John Key appeared to suggest an annual value of perhaps $500 for an average wage and salary earner or $1000 per average household could be in prospect.

"We haven't designed the package but we intend to focus on low and middle income earners," said Key, noting that the average wage had risen from $47,000 to $55,000 a year and was forecast to reach $62,000 annually before 2020, which would take an average wage and salary earner close to the top personal tax rate of 33 percent, which cuts in at $70,001 at present.

Incomes over $48,001 attract 30 percent tax at present.

The cuts would be afforded by lowering taxes instead of either spending more or reducing government debt more quickly, although today's National Party policy announcement commits also to paying down debt in dollar terms by 2017 and reducing net government to gross domestic product (the size of the economy) to 20 percent by 2020.

They would come from the $1.5 billion annual provision announced in the budget and confirmed in the Aug. 19 pre-election fiscal and economic update from the Treasury, as available for spending or debt reduction. Today's announcement effectively earmarks $1 billion of that "headroom" over three years for tax cuts, although they would not occur before 2017, and another $500 million for debt reduction.

Both the tax cuts and debt reductions are subject to fiscal and economic conditions. Reductions of between $700 million and $900 million a year in ACC levies are also in prospect, also subject to the state of ACC's accounts.

The announcements mean no change in the date at which contributions to the New Zealand Superannuation Fund would resume. Labour Party policy is to borrow to resume Super Fund contributions, reasoning that earnings in the fund will more than offset the interest costs of borrowing and preferring to start building the fund sooner rather than later after National stopped contributions following the 2008 global financial crisis and local economic recession.

Finance Minister Bill English had previously appeared rule out tax cuts, as recently as the pre-election fiscal update, which was published less than a week after the publication of the Dirty Politics book, which has derailed National's election campaign, if not its public support levels, according to some recent polls.

Asked at a press conference outlining the changes whether there had been a shift because of concerns about its political support, English replied: "It's what we said. We have consistently said we won't do dollars per week (of tax cuts)" but had $1.5 billion of annual fiscal headroom, of which between $600 million and $700 million would be applied to topping up the health and education budgets.

(BusinessDesk)

Add a comment

News

Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students

29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more

New Zealand reaffirms support for Flight MH17 judicial process

7 Mar 2020 News By Rt HON WINSTON PETERS
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more

Business

NZ Government's Economic package to fight COVID-19

17 Mar 2020 Business News By RT HON JACINDA ARDERN
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more

NZ Government announces aviation relief package

19 Mar 2020 Business News By Hon Phil Twyford
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more

Living

Diversity was Key at New Zealand Trade Tasting in London

6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall. It was the first... more

Kiwi author stuns Behind the Butterfly Gate

12 Jan 2022 Arts By Charlotte Everett
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...  New Zealand writer Merryn Corcoran’s... more

Property

Fairer rules for tenants and landlords

17 Nov 2019 Property By Minister Kris Faafoi
17 NOVEMBER 2019 The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more

New Zealand Government will not implement a Capital Gains Tax

17 Apr 2019 Property By RT HON JACINDA ARDERN
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more

Migration

Boosting border security with electronic travel authority – now over 500,000 issued

19 Nov 2019 Migration By Hon Iain Lees-Galloway
19 NOVEMBER 2019 We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more

Christchurch reinstated as refugee settlement location

18 Aug 2018 Migration
18 AUGUST 2018 HON IAIN LEES-GALLOWAY The announcement that Christchurch can once again be a settlement location for refugees... more

Travel

Gallipoli Anzac Day services cancelled

19 Mar 2020 Travel & Tourism By RT HON JACINDA ARDERN
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more

New Zealanders advised not to travel overseas

19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas more

Sport

The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners

27 Oct 2019 Cricket By Charlotte Everett
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more

PREVIEW: All Blacks v England semi-final

26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade First published on Werewolf The ghastly likes of Marine Le Pen in France and Geert ... more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome Well um.. on the bright side, there (probably)... more

Kiwi Success

Congratulations to Loder Cup winner

26 Sep 2018 People By Hon Eugenie Sage
25 SEPTEMBER 2018 The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more

Appointments to New Zealand National Commission for UNESCO

16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO HON JENNY SALESA Associate Education Minister Jenny Salesa is... more

Recruitment

Historic pay equity settlement for education support workers

14 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more

Historic pay equity settlement for education support workers

22 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more