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Cullen wrong re indexation of tax

Thursday, 28 October 2004

Cullen wrong re indexation of tax

Revenue Minister Dr Cullen has it wrong when he says that “no administration in the world allows tax rates to be set by the rate of inflation”, according to United Future revenue spokesperson Gordon Copeland.

“Tax bracket indexation is a feature of the individual taxation systems in the United Kingdom, the United States, and Canada.

“Canada introduced a five year tax reduction plan in January 2000. As part of that plan a full indexation system was introduced. The UK has a system of statutory indexation of tax bands and allowances in place unless Parliament intervenes.

“In the US the Federal Government also uses inflation adjustments for tax rates. Each year the government releases two documents detailing the adjustments for the following year.

“It’s a bit rich for Dr Cullen to pour cold water on the idea of a tax cut, to cover the effects of inflation, in 1 April 2005. The government indexes taxes on alcohol and tobacco and will shortly introduce similar methodology for excise duty on petrol.

“The new “Working for Families” package introduced this year, with United Future support, will increase the various payments each time the CPI index increases by 5%.

“The simple truth is that it gets harder and harder for the government to justify the unjustifiable,” said Mr Copeland.


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