ACT Policy: A Tax Cut for Every Worker

ACT New Zealand
Tuesday, 24 May 2005
Policy - Taxation

ACT's vision is of a low tax country, where Kiwis keep more of what they earn, and the country grows and prospers.

Summary

ACT's taxation policy comprises a lower, simpler tax system of just two rates: a top tax rate (and company tax rate) of 25% and a lower rate of 15% for incomes up to 38,000. This is affordable and would boost economic growth rates by 1%.

ACT's goals

Reduce taxes to enable higher levels of economic growth;
Reward New Zealanders by letting them keep more of what they earn.

ACT's policies

Reductions in the top rates of income tax to 25% for incomes over $38,000.
Reduction in the lower rate of income tax to 15% for incomes up to $38,000.
Reduction of company tax to 25%
Associated reductions to fringe benefit tax and withholding taxes.
Reverse Labour's 5 cents a litre additional petrol tax.
Taxpayers bill of rights, and cap on real government spending per capita.

Policy outcomes

People get to keep more of what they earn, meaning higher savings rates and lower overall indebtedness of households.
Higher levels of employment and wage growth.
Higher economic growth as a nation (Treasury estimates an additional 1% annual growth).
Spin-offs for attracting skilled migrants and New Zealand ex-pats to return home. Tax cuts work the same as pay rises.

ENDS