Kiwis deserve tax relief from cost of living crisis

The Government should give struggling Kiwis a break this Budget and deliver tax relief from the cost of living crisis, says Opposition Leader Christopher Luxon.

“Inflation is at a thirty year high, with the cost of everyday basics like food, petrol and housing all through the roof. The average Kiwi family is worse off than they were 12 months ago and the Government needs to act.

“One of the hidden costs of inflation is bracket creep, where earners are paying more tax solely because of inflation. Someone on the average wage now has a marginal tax rate of 33 per cent. That’s not right.

“At the upcoming Budget the Finance Minister should adjust the bottom three income tax thresholds to account for the inflation we’ve seen in the last four years under Labour.

“A family with two adults on the average wage would benefit by over $1,700 a year. Someone earning $55,000 a year would pay $800 less tax. Everyone earning over $78,100 would be better off by over $1,000 a year. In addition, the couple rate for NZ Super would go up by $546 per year on top of the scheduled increase this April.

“Anyone earning over $14,000 or receiving NZ Super would be better off as a result of these changes. No one will get rich, but they will make things a little easier for Kiwis struggling with the rapidly rising cost of living.

“These changes would not put further pressure on inflation or require spending cuts in areas like health and education. They would be met from Grant Robertson’s record $6 billion new spending allowance, and so would simply require Labour to be slightly less profligate with its new spending in Budget 2022.

“Even after accounting for the $1.7 billion cost of these tax cuts, the remaining $4.3 billion would still be the biggest allowance for new spending initiatives ever.

“It’s time for the Government to stop its massive tax grab. They need to take action and deliver tax relief to hard working Kiwis struggling under a cost of living crisis.”

You can read our Income Tax Inflation Reset Fact sheet here.

To see how much Kiwis would save, try out our Tax Calculator at www.national.org.nz/tax-calculator


Proposed changes to brackets

 

Current brackets

Proposed new brackets

Tax rate

Lower threshold

Upper threshold

Lower threshold

Upper threshold

10.5%

$0

$14,000

$0

$15,600

17.5%

$14,000

$48,000

$15,600

$53,500

30.0%

$48,000

$70,000

$53,500

$78,100

33.0%

$70,000

$180,000

$78,100

$180,000

39.0%

$180,000

-

$180,000

-

 


Impact on taxpayers

Income

Annual tax saving

$45,000

$112

$55,000

$800

$75,000

$950

$78,100 +

$1,043


Over 3.2 million Kiwis would benefit from these tax threshold changes.


Impact on superannuitants

Annual increase to NZ Super (over April 2022 rates)

Couple

$546

Single (living alone)

$355

Single (living with others)

$328


Around 800,000 over-65s would gain from the changes to NZ Super