John Key MP
National Party Finance Spokesman

16 November 2005

Officials support tax reform to boost growth

National Party Finance spokesman John Key says Treasury briefing papers released late today prove "how out of touch and out of date Labour really is".

The Treasury notes that economic studies 'have made significant advances in recent years .... these studies strongly suggest that high marginal tax rates damage growth'.

The Treasury goes further and says 'new studies have shown that taxes on personal income, company income, payroll and property damage growth, while taxes on goods and services have a more muted effect on growth ... these studies suggest that high marginal tax rates on personal and company income are the most damaging to growth'.

"The Treasury expresses urgency in having the Government focus on tax reform - by which they mean lowering marginal rates - 'in the shortest possible time frame'.

"These papers show that Labour's old-fashioned ideological opposition to meaningful tax reform is holding our economy back. The crucial factor in a meaningful growth strategy is missing and that is bad news for working New Zealanders. "Treasury has also endorsed National's concerns about a productivity collapse in the public sector, and highlighted concerns about profligate and wasteful government spending.

"The quality of health and tertiary education spending is of particular concern to Treasury officials, who are urging the Government to pay special attention to these areas," says Mr Key.

ENDS

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