Newsworthy Tax Special
23 August 2005
National's Tax Policy National's plan restructures the tax system by providing fair tax relief and targeted family assistance worth about $3.9 billion by the third year.
* The 15% tax rate, which now applies to income below $9,500 will extend to $12,500.
* Income between $12,500 and $50,000 will be taxed at 19%.
* The withholding tax rate for secondary employment will be 19%.
* Income between $50,000 and $100,000 will be taxed at 33%.
* Income above $100,000 will continue to be taxed at 39%.
* The lower statutory rate of withholding tax applied to interest and other investment income will be reduced from 19.5% to 18%.
* The threshold for abatement of WFF payments will be $30,000 from April 2006, and to keep the effective tax rate on extra income low, the abatement rate will be 20%.
* The company tax rate will be reduced to 30% in April 2008.
* The personal tax cuts will be implemented in two stages in April 2006 and April 2007.
* Pushing the threshold for the 19% rate out to $50,000 will dramatically change the tax rate on extra work for around 300,000 working New Zealanders.
* The 39% top personal income tax rate will over eighteen months be shifted out to $100,000. That will lower the marginal rate from 39% to 33% for almost 200,000 taxpayers. In addition, National will not introduce Labour's planned carbon tax. That will save the average household at least $200 per year from 2007. Work out your personal tax cuts on www.taxcuts.co.nz
Working for Families National will replace Working For Families with a family tax package, but no one will be worse off. During the interim period, a 20% abatement rate will be applied on top of our 19% rate out to $50,000. This will mean that even with income support abating, lower income earners will face an effective marginal tax rate no higher than the top rate of personal income tax of 39% (19% plus 20%).
Under Labour, those around the average wage and up to $60,000 of income will face a 53% effective marginal tax rate as their income support abates. Those earning over $60,000 will face a 59% tax rate.
* A two income family, with two young children, and a household income of $80,000 arising from two $40,000 incomes, will be $1,512 better off under National in the year starting April 2006, and $592 better off in the year starting April 2007. They will also save at least $200 a year by scrapping the carbon tax.
* If that family faced childcare expenses of $10,000 for two pre-school children, they could claim a refund of $3,300. Thus a hardworking couple on modest incomes would, with the maximum childcare deductibility, be $4,812 a year better off under National from April 2006, and $3,892 a year better off from April 2007.
* If they did some overtime, the tax on extra work would be 39% after abatement, not the 53% under Labour's package. Superannuitants Superannuitants will benefit from National's package, as the net superannuation payment is related to the after-tax average wage. · Under National the annual net payment for a married couple receiving NZ Super will increase by about $320 in April 2006, rising by inflation to around $410 in April 2007, and then a further lagged increase from the tax cuts to around $560 from April 2008.
Student loans For those with student loans, the tax cuts, together with deductibility of interest on those loans, will have a large impact on the ability to repay loans quickly.
* This package substantially reduces the tax rate faced by ordinary Kiwis who work a little harder, or do some extra overtime.
* A person on the average wage can work harder, do overtime, or take secondary employment, and they will from next year keep more than $4 in every $5 they earn.
* It is designed to allow people to get ahead from their own efforts.
* Young families will benefit; superannuitants will benefit; those with student loans will benefit; all hard-working Kiwis will benefit.
* We will NOT lose one teacher, one nurse, or one doctor to pay for this tax package.
* In fact, the number of nurses, doctors and teachers will keep rising, probably quicker than under Labour. Front-line nurses, doctors and teachers are more important than pen-pushers.
* We have fenced off education, health and superannuation costs. There will be no cuts to any of these.
* The only public servants who should be concerned about their jobs are those who are not doing anything productive.
* We will help pay for our tax cuts by cutting wasteful bureaucracy only.
* We expect to save an average of $400m a year by cutting remaining public expenditure by 2%. There is at least that much waste in the rest of the system.
* We will cancel Labour's KiwiSaver programme. People can't save because they don't have enough money in their pockets. It is insulting for Labour to start such a scheme to encourage saving when they won't give people back more their money so people can save for themselves.
* We will drop Labour's indexation of tax thresholds.
* We will make savings from Labour's waste and low quality spending.
* We will increase the size of government spending at a lower rate than Labour. Spending will keep increasing, just not as fast as Labour.
* We will NOT pay for tax cuts by borrowing. We will do some borrowing for capital expenditure. This is completely normal practice. Tax cuts will NOT be funded by borrowing money - that is Labour's scare tactics.
* Our tax cuts will not increase interest rates. This has been confirmed by three leading independent bank economists.
23 August 2005 No. 42
Upcoming Public Meetings Tuesday 23 August at 7.30pm Epsom Baptist Church candidates meeting in Epsom - 4 Inverary Avenue - Epsom
Thursday 25 August at 7.00pm Somervell Presbyterian Church Candidate Debate - Cr Greenlane & Remuera Roads Sunday 28 August at 5.30pm Politician Sunday at Eden Assembly of God Church - 1 Taylors Road - Mt Albert Saturday 3 September at 3.00pm Consortium of Tamil Assns in NZ Public Meeting - Mt Roskill War Memorial Hall - 13 May Road - Mt Roskill Monday 5 September at 7.00pm Candidates Meeting St Michaels Church - 6 Beatrice Street, Remuera Tuesday 6 September at 7.30pm Greenlane Christian Centre - Election Debate - 17 Marewa Road - Greenlane Tuesday 13 September at 12.30pm Newmarket Business Assn Candidates Debate - Newmarket Club, Teed Street - Newmarket