The Coalition Government’s legislation today to remove the tax threshold changes from Budget 2017 will mean less money for 1.2 million working Kiwis, National Party Finance Spokesperson Steven Joyce says.
“This bill means hard-working Kiwis on the average wage will no longer receive the $1060 extra money they were due to receive from 1 April next year,” Mr Joyce says.
“It is very strange for a Government that says it wants to increase the wages of hard-working Kiwis to start by taking more than a $1000 a year off them.
Mr Joyce says the savings the Government has made by cancelling the tax changes have all gone into providing a year’s free tertiary education, which will not be targeted to those most in need.
“It is wrong to take $1060 off average wage earners to give a year free tertiary education to lawyers and accountants.”
Mr Joyce says the decision means a majority of full-time Kiwi workers will face a marginal tax rate of at least 30 cents in the dollar for every additional dollar earned.
“This is a very high rate, especially when you add in GST and the abatement rates for programmes like Working for Families and the Accommodation Supplement.
“Kiwi families quickly get into the situation of paying more than half of any extra income they get in tax.
Mr Joyce says the package as a whole is overly complicated and poorly designed.
“National’s Family Incomes package was structured to lift 50,000 children out of poverty from April 1 next year. Labour’s 88,000 is not until 2021 by which time National would have undertaken its second similar package with a similar impact.
“Labour could have achieved the same result with a much simpler package that retains the tax cuts and provides better rewards for hard work.
“This bill complicates an already far too complicated tax and benefit system.
“Kiwis already get confused about what they are entitled to. This package makes it worse.
“We need to strengthen the link between work and income so that people know they get more when they work extra hours or change for a higher-paying job.”