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Tomorrow's The Day for Tax Cuts


Tomorrow's The Day for Tax Cuts

Richard Prebble’s Speech Notes, Pre-Budget Press Conference - Delivered at 11.30am in ACT New Zealand Caucus Room.

The country wants a tax cut in tomorrow's budget.

ACT has called today's press conference to reveal the results of a massive survey we have conducted of businesses and households across New Zealand.

In early April I wrote to Dr Cullen setting out the case for an immediate tax cut.

The projected budget is $4 billion - that is 3 percent of GDP. The country is being overtaxed.

If the over-taxation were returned to New Zealanders, the average family would be $50 a week better off.

Tax increases mean 18 percent of full time workers are now paying the 39-cent income tax. Stealth taxes, including two increases in fuel taxes and last week's increase in excise duty on alcohol, have raised taxes by $9 billion.

The average family with both partners in full time work is in real terms after tax at 28 a week worse off.

I wrote to Dr Cullen pointing out that ACT and Labour have a majority in parliament so Labour could ignore the Greens and United and put forward a prosperity-creating budget.

Crucial to ACT's proposals is dropping the Cullen Super Scheme. The Scheme is a risky gamble investing mainly in overseas equities.

To persuade Labour to cut taxes, ACT decided to survey business. We wanted to test the proposition that high taxation is popular.

First we surveyed 110,000 businesses by fax.

We asked :

Did their business believe it was over taxed? - 97 percent said YES.

Then we put the option

- Would they support a $50 a week tax cut - 12% said YES

- Or did they support a McLeod Tax Reform style tax cut - a remarkable 85% said YES.

The results were statistically valid. A return survey contains some bias - the survey relies on the number returning. A 1 percent return rate is regarded as good, 3 percent as being statistically significant. A massive 5.5% of the 110,000 businesses surveyed returned ACT's survey.

Business is very concerned about the economic environment and the excessive level of taxation. These results are so significant ACT decided to do some household surveys. We wanted to see if working families are also seeking tax relief. We started with a small survey in West Auckland. The results were overwhelming so we extended the survey to other cities, provincial towns and - this week - rural New Zealand.

ACT is surveying 400,000 households. We are on track for a four percent response rate. This is our survey letter.

Here are the questions and replies:

Do you believe you are paying too much tax? 91 percent said yes, 9 percent said no.

Do you support $2 billion a year being invested mainly overseas in the Cullen Super Scheme? 75 percent said no, 11 percent yes.

The Cullen Super Scheme has huge credibility problems. Massive losses in the Government super fund, and now the allegations of insider trading fraud, are only part of the reason.

We asked: Would you prefer the money be returned to taxpayers so they could invest it themselves? 71 percent said yes. Just 17 percent said no.

We then asked what should happen to the $4 billion extra tax revenue? We gave three options. Option one: return it to every taxpayer - an extra $50 a week. Option two: the McLeod Report principles - top individual rate 25 percent, company 25 percent, bottom rate 18 percent. Option three: did they support the Labour Budget?

34 percent favoured across-the-board tax cuts of $50 a week. 59 percent chose the McLeod principles, and 7 percent of our survey chose the Government's present Budget.

I believe there is a middle class tax revolt underway. And I think we have found the reason. The electorate believes its tax dollars are being wasted.

72 percent oppose Government sponsoring the America's Cup Challenge. Maori TV is opposed by 89 percent of taxpayers. Only 6 percent support Labour's approach to Welfare.

Public opinion polls on tax often show strong support for tax increases. Our survey shows the opposite. I think there are three reasons for the difference.

Often, pro-tax questions are loaded questions, like: would you support paying a little extra tax to fix the health system? Well, if I thought a little extra tax would fix the health system, I'd support tax rises myself! We asked people if they thought health had been fixed by increased tax revenue? Only 3 percent said yes. Only 3 percent were satisfied with education. 88 percent are concerned about violent crime.

Second, general polls survey all adults - one-third of whom are on benefits. Just one-third of the entire electorate pays nearly all of the income tax. I'm sure it was the working taxpayer who was replying to our survey.

ACT's poll measures something that the public opinion polls cannot judge - how strongly a viewpoint is held. To answer ACT's poll, you had to fill it out, go to the Post Office and send it. It's hot issues that change Governments. If Labour won't cut taxes for the economic benefits or as an issue of fairness, then they should, as an issue of political survival. A tax cut is vital.

When we carried out this survey, we gave members of the public an opportunity to comment. Here are some of their comments:

"This Government has pandered to interest groups like none before it. Many of my colleagues are leaving New Zealand. In twenty years we will have no decent teachers or doctors, but a whole raft of culturally-correct freeloaders." That comment is from a Wellington doctor.

Jenny from Glen Eden says: "Many of my friends feel that ACT is the only hope. I used to be a Labour supporter all my life. Not any more. ACT is the only way to go."

And a young farmer from the High Country asked us: "What benefit does an everyday working-class New Zealander get out of these tax hikes?"

Introduces Gareth Davis, member of public who responded to ACT New Zealand survey, to explain why he wants tax cuts.

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