Finance Minister Steven Joyce told the Pre Election Economic and Fiscal Update media conference that the Government would set out the principles they would apply to drawing up a further family incomes package to be implemented in 2020.
That would include moves on tax.
Otherwise, he said, he could not see any room for tax cuts between now and then beyond the family incomes’ package to come in on April 1 next year.
All eyes will be on Finance Minister Steven Joyce shortly after mid-day today when the Government unveils its Pre-Election Fiscal Update.
Last night some Government sources were saying there was an announcement on tax expected from the Minister but they did not know when it would be made.
That sounds like a hint that there will be more tax cuts to come on April 1 next year.
That would fit with what we know of National’s campaign strategy so far which is to try and highlight what it argues is Labour’s policy to tax more.
In a Facebook ad posted yesterday, National has a tape of Labour’s Housing spokesperson, Phil Twyford, saying it would be much easier to sell a capital gains tax once the party is in Government because it would have an “army of public servants and a much bigger megaphone”.
Twyford also says Labour would have a land value tax and asset and wealth taxes on the table with the capital gains tax.
Meanwhile, Leader, Jacinda Ardern, told RNZ’s “Morning Report” yesterday that Labour would announce its income tax policy after today’s PREFU which would give it a clear idea of how much it might have to spend on education and health.
But last election Labour proposed to raise income tax on those earning more than $150,000 a year from 33 to 36%.
National has already announced tax cuts to apply from April 1 next year by changing rates on money earned below $52,000 a year.
But Treasury documents have been released under the Official Information Act showing that National’s tax cuts announced in the Budget were below what was needed to keep up with inflation.
In an email to the Minister’s office on April 7, Treasury said the new rates would go a significant way towards addressing fiscal drag since 2010.
Both the $14,000 and $48,000 thresholds were raised.
But the Government decided not to raise the $70,000 income at which the top rate cut of 33% cut in.
Treasury says that to keep pace with inflation that rate should have gone up to $76,245.
If National doesn’t opt for more tax cuts, it seems it is spending up large anyway.
The Taxpayers’ Union says that since last Monday, National has increased promised spending from $2.5 to $6.8 billion across the next parliamentary term.
Mac Mckenna, an economist at the Taxpayers’ Union, said, “The most expensive new policy Bill English has announced is the proposed roads of national significance. The cost works out at approximately one billion each year over the estimated ten-year timeframe. This was accompanied by $290 million in agreed-in-principle treaty settlements; $285 million in cheaper GP visits for children; and $459 million over three years towards the building of a new hospital in Dunedin.”
Ironically the right wing Taxpayers’ Union finds that Labour under Ardern has promised less spending.
Mckenna says that since Ardern has taken over, there has been very little new policy aside from water taxes and a commuter rail service between Auckland, Hamilton and Tauranga.”
“Total Labour Party spending is now at $19.4 billion, which is within $1 billion of Andrew Little’s Labour Party.”