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News Worthy: National’s tax package

10 October 2008 – No. 266

National’s tax package

National’s tax package sets out a three-year programme of personal tax cuts. Including the very recent tax cuts of 1 October 2008, this programme will give a person earning around the average wage a total tax cut of $47 each week, after it is fully phased in.

The package has two key elements:

• The introduction of an Independent Earner Rebate.

• Changes to personal income tax rates and thresholds.

The package has been designed to be appropriate for the current economic and fiscal conditions. It does not restrict future movement on income tax rates and thresholds.

Paying for tax cuts

The rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing.

This is shown in the table below. Totalled over the next term of government, the cost of National’s personal tax cuts is balanced by the revenue savings from:

• Changes to KiwiSaver.

• Discontinuing the R&D tax credit.

• Replacing Labour’s proposed tax cuts.

/ 2008/09 ($m) / 2009/10 ($m) / 2010/11 ($m) / 2011/12 ($m) / Total ($m)
Cost of National’s tax cuts / 290 / 1,290 / 1,834 / 2,300 / 5,714
Savings from tax changes / -217 / -1,101 / -1,969 / -2,710 / -5,997
Net cost of tax cuts / 73 / 188 / -134 / -410 / -283

To fund National’s tax package there is no requirement for additional borrowing and there is no requirement to cut public services.

Manipulating the message

The number of staff employed to communicate the Labour government's message has grown by at least 112% in the past six years.

At 1 July 2008 government departments employed 505 public relations, communications, media staff and contractors. Six years ago, they had 238. New Zealanders know the service provided by these departments isn't twice as good.

The number of public relations, communications, media staff, and contractors has risen nearly 13% in the past year alone, up from 448 in 2007, to 505 this year.

Notable departments to see increases:

• Department of Conservation - 96% increase

• Ministry for the Environment - 88% increase

• Inland Revenue Department - 100% increase

It is an interesting statistic that under the Labour-led Government we have seen an increase in the amount of extra floor space leased for bureaucrats in central Wellington equivalent to almost four Te Papa size museums.

It droppeth as the gentle rain from heaven upon the place beneath

So said William Shakespeare in the Merchant of Venice. The new showering regulations, which take effect on 1 February next year, are part of amendments to the Building Code Compliance Document NZBC H1 Energy Efficiency covering hot water systems. To get any new building consent, the flow rate in showers will have to be approximately half that of existing household showers. It will also be illegal to change any shower head to increase flow rates after 1 February.

Houses with solar, wetbacks or heat pumps may be using negligible electricity to heat their water. It is illogical to put restrictions on shower flows when no restrictions are put on bathing which uses significantly more energy. These regulations apply even if you’re not connected to the national grid or town water supply.

Political Quote of the Week

“Life is like a game of cards. The hand that is dealt you represents determinism, the way you play it is a free will” – Jawaharlal Nehru - First Prime Minister of India

Dr Richard Worth

National Party MP


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