The Minister of Finance lacks any credibility in criticising National’s plan to index tax thresholds to the cost of living given his Government’s wasteful use of taxpayer money while he appears to have a limited understanding of how tax indexation actually works, National’s Finance Spokesperson Amy Adams says.
“Grant Robertson has claimed National can’t afford tax indexation. That is simply not true, and a bit rich coming from a Minister of Finance who is wasting billions, taxing Kiwis more and overseeing a slowdown in the New Zealand economy.
“Firstly, tax indexation is not a tax cut. Instead it prevents future governments from increasing taxes by stealth due to inflation pushing New Zealanders into higher tax brackets without a rise in real incomes.
“The first adjustment is expected to put $650 million a year back into the pockets of hard-working New Zealanders, based on 2 per cent annual inflation. That estimate is based on the Treasury’s own model.
“And to put that figure into perspective, it’s a drop in the bucket compared to the billions being wasted by the Government on poorly thought through policies. They include almost $3 billion on fees-free tertiary, $3 billion on the NZ First Slush Fund, $2 billion on the KiwiBuild fiasco and $300m on working groups because Labour didn’t do the work in opposition.
“It’s also important to note that Treasury’s long run forecasts already assume governments will adjust tax settings to account for bracket creep or fiscal drag. So in the long run, tax indexation is already built into the Crown’s fiscal projections.
“The irony is that this criticism comes from the same person who has hidden billions of dollars in off-the-balance sheet debt as a way to convince New Zealanders the Government is meeting its own debt targets.
“National is committed to helping New Zealanders get ahead. Tax indexation means that as well as cancelling the new taxes this Government has piled on, we won’t allow future governments to use inflation as an annual tax increase by stealth.
“Unlike the current Government who have imposed new taxes and wasted billions of taxpayer money, National understands the importance of good fiscal management and of allowing New Zealanders to keep more of what they earn to keep up with the rising cost of living.
“We believe a responsible government should tax New Zealanders cautiously, spend their money wisely and focus on keeping debt low so New Zealand is prepared for an economic or natural disaster.”