IRD and Treasury advised the Government of the growing case for personal income tax reductions, but Labour refused to rein in its spending to fund them, National’s Finance spokesperson Nicola Willis says.

“The Labour Government’s own officials made a strong case for personal tax relief in Budget 2023, but instead of heeding this advice, Finance Minister Grant Robertson and Prime Minister Chris Hipkins ignored it.”

Inland Revenue and Treasury advised the Government that:

• “Personal tax reductions could address a range of policy outcomes” including “supporting incomes to assist with cost-of-living pressures”
• Their preferred method of tax relief was adjustments to income tax thresholds, arguing this would “have a greater economic impact as well as provide a more significant gain to those taxpayers”
• They were concerned about ‘fiscal drag’, as ‘more taxpayers and taxable income being taxed in higher brackets because of wage inflation”, stating that “…fiscal drag has had the greatest impact on average full time wage earners. However, it is increasingly impacting lower income individuals over time.”
• “[the] average wage ($76,275 in the December 2022 quarter) is currently above the $70,000 threshold, so is taxed at a marginal rate of 33%. In 2010, it was just above the $48,000 threshold.”

“New Zealanders need tax relief now more than ever. Tax relief is the right thing to do. Treasury knows it, IRD knows it, National knows it and Kiwis know it too. It seems Labour are the only ones who just can’t accept it,” Ms Willis said.

“Not only has Labour refused to give a single cent of tax relief to hard-working Kiwis, but redactions across multiple documents from Inland Revenue and Treasury also suggest they still have new taxes under consideration. More taxes could be on the way.

“National will deliver tax relief. We would adjust income tax brackets to compensate for the effects of inflation. Our plan would provide around $1000 more each year for someone on the average wage."