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Copeland: Kiwis overtaxed - adjust tax brackets

Copeland: Kiwis overtaxed - adjust tax brackets

United Future finance spokesman Gordon Copeland has renewed his call for the Government to adjust personal tax brackets to, "at the very least", reflect inflation.

Speaking in Parliament in the Budget estimates debate yesterday, Mr Copeland said the present bands of $9500, $38,000 and $60,000 should be moved to around $10,500, $42,000 and $65,000.

"I believe the Government has erred in not making those adjustments which would have meant tax reductions for all tax payers. As a result New Zealanders are now overtaxed," he said.

"For a similar reason, we should immediately reduce the company tax rate to 30 cents.

"As interest rates are higher in New Zealand than in Australia, we cannot, in my view, afford to continue to run a higher tax rate. Companies are the engine of the New Zealand economy so we need to depress the accelerator a little and speed that engine up," Mr Copeland told the House.

"I strongly believe that New Zealand's economic interests would have been better served by the Government had it chosen to adopt United Future's policy of indexing the tax brackets and cutting the company tax rate to 30 cents in the new budget year.

"This would have provided fiscal stimulus to the economy at the very point at which it was most needed.

"Budget projections clearly indicated that we are looking at a halving of the growth rate from 4.4% in 2002/03 to 2.2% in 2003/04. Surely, in those circumstances, and given the size of the surplus - which incidentally continues to run ahead of forecasts - we have a perfect opportunity to use fiscal policy to cushion the downturn, minimise its duration, and establish a pathway back to strong growth later this year.

"In the absence of fiscal stimulus we are now entirely reliant on monetary policy: a much more indirect route," Mr Copeland said.

United Future would back pre-Christmas tax cuts, he said.

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