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Tax Policy Political Rot

Tax Policy Political Rot

Wednesday 17 March 2004

ACT Leader Richard Prebble said ACT welcomed the National party leader's commitment to lower taxes but are disappointed that National's proposals are driven by politics and not sound economics. "National's proposals are also unfair," said Mr Prebble.

"There is no economic or fairness case to cut taxes for the low paid.

"I remind Dr Brash that in June 2002 before he was an MP, he said `the tax system was skewed towards the low income earner rather than the higher earner. Someone on $100,000 with a dependent spouse and two children paid almost 100 times more tax than someone on $25,000 who, in the same circumstances, received family tax credits.' The only thing that has changed is that Dr Brash has become a politician.

"Most of the low income households in New Zealand are net receivers of cash from the government via welfare or family support payments. "Dr Brash's proposals are not economically sound. Most small owner-operator businesses pay little company tax now.

"The taxpayers who paid the bulk of the surplus are middle income families who are now paying the 39 cent tax rate.

"ACT's priority is to immediately reverse Labour's 39 cent tax rate. It is just an envy tax.

"Tax on income is a penalty for working. Tax companies pay is the price for investing and creating jobs.

"Sound economics say that to increase productivity, investment, growth and jobs we need to lower the marginal rate of tax as far as is possible. With a six billion dollar surplus, a 25 cent tax rate now still gives a healthy surplus," said Mr Prebble.

ENDS

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