Extra Revenue From Tax Hike Wiped Out
“The economic downturn has wiped out in a month the extra tax revenue Finance Minister Michael Cullen was expecting for the year from his six-cent hike to the top tax rate,” said ACT Finance spokesman Rodney Hide today.
“He’s on track to have even less tax revenue than if he had left tax rates where they were. That’s the impact his policies have had on business and jobs and it’s now feeding through to the government accounts.
Treasury’s Consolidated Tax Revenue figures for the Month of September on their web site show that total tax revenue is down $330 million or 12.1 percent for the month on what Treasury forecast at Budget time.
Income tax is down 14.6 percent for the month with Company Tax down a whopping 39.7 percent. GST is down 10.2 percent.
“The six-cent tax hike was predicted to produce an extra $400 million for the government over a year. But here is $330 million lost in just a month because of the poor state of the economy. “The ACT party told Michael Cullen when he raised the top rate of tax that the increase would have a negative impact on the economy and ran the risk of generating no extra revenue for the government. He wasn’t listening then. I hope he’s listening now.
“If this trend continues a deficit is possible. “The IMF report on New Zealand released this week flagged that the Government’s revenue forecasts are too rosy and that the ‘negative macroeconomic effects of the policies of the new government’ may mean that the Government’s accounts aren’t in as good a shape as forecast (p.16). The now-released September tax figures confirm the IMF’s view.
“It’s well-past time that Michael Cullen paid attention to the economy. The key to jobs, growth, and better government accounts, is lower tax, not higher,” Mr Hide said.
For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at email@example.com.