Tax cuts
United Future is the only party offering tax cuts for every taxpayer, for every family, for all companies, every business, all superannuitants, every property owner and every charitable and not-for-profit organisation in New Zealand!
1. Every taxpayer
We will do this by
· Making the first $3,000 of earned income tax free. This will yield savings of up to $11 per week for every taxpayer. This will be better for teenagers, students and all of the other 1.1 million taxpayers (many part time) who earn under $17,000, than National’s offer. Labour offers nothing until 2008 and then only a few cents per week!.
· Adjusting the 33 cent and 39 tax brackets by $5,000.
(a) This will give a saving of between $11 and $24 per week to the 1.1 million taxpayers earning between $17,000 and $43,000. This is pretty much in line with National. Labour offers nothing until 2008 and then only about $1 to $5 per week.
(b) For the 682,000 taxpayers with incomes above $43,000 our package will yield savings of between $24 and $30 per week. This is less than National but income splitting for couples with children (see below) may still see many families better off with United Future. Labour are offering between $5 and $10 per week but not until 2008.
2. For every family
United Future will retain the Working for Families package as announced in the 2004 Budget including, unlike National, the extra $10 per week per child in 2007, as a floor for all affected families. None will be worse off. However by lowering tax the delivery mechanism will change so that the “top up” from government will be less. This creates better outcomes for families when their income increases. In addition we will provide income splitting for couples with dependant children. Between 350,000 and 400,000 couples (700,000 to 800,000 taxpayers) will benefit and, taken together with the other personal tax cuts, would see a couple-led family with children at the average gross household income level of $82,400 paying less tax by up to $163 per week! Neither Labour nor National offers income splitting.
3. For all superannuitants
All superannuitants will benefit from the removal of tax on the first $3,000 earned each year since this will affect the amount of NZ super. In addition we will alter the annual adjustment formula so that, instead of being on average 9 months behind changes in the cost of living and the average weekly wage, it will take into account the forecast movement in those indices. Taken together these changes will increase the after tax amounts of superannuation as follows:
Married couple - $21.34 per week or $1,110 per annum
Single living alone: $13.88 per week of $722 per annum.
Singles sharing with others - $12.80 per week or $666 per annum.
In all cases this is a 5.4%increase on current entitlements. Labour is offering no increase in NZ Super. National is offering an increase of $320 per annum for a married couple.
4. For every property owner
GST will not be added to rates. On a rate demand of say $1,350 per annum this will save $168.75 in GST. Labour and National will retain GST on rates.
5. For every business
We will do this in a number of ways.
· By lowering the company tax rate from 33% to 30% over the next three years.
· By a conditional tax free holiday for new businesses.
· By a commission payment of 1% of the net value of GST paid by registered persons up to $200,000 GST per year.
· By reviewing the tax treatment for research and development to incentivise private sector expenditure of 1.5% of GDP p.a.
Labour is offering none of the foregoing. National will also cut the company tax rate to 30% but not until 2008.
6. For every charitable and not-for-profit organisation
United Future will increase the tax rebate on donations by individuals to charities tenfold, from $630 per annum to $6,300 per annum and for companies from 5% to 50% of net profit. Labour and National are offering nothing.
Is the United Future tax reduction package affordable?
The answer is “yes”. The total income lost to government, when fully implemented, will be $2.5 billion per annum, phased in about $1 billion in 2006 and a further $750 million in each of 2007 and 2008. All up tax reductions of $5.25 billion over the three year period. This compares with National’s offer of $9.6 billion over the same period.
After allowing for these tax cuts, and without reducing expenditure on health, education, superannuation, police etc, the government’s surplus over the three year period will still be at least $8.5 billion and perhaps more.
Our tax cuts are prudent, and affordable.
http://www.unitedfuture.org.nz/
Gordon Copeland Finance spokesman 26 August 2005
