Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Lost – Billions in Revenue


Andrew Williams MP
Spokesperson for Revenue
7 May 2014


Lost – Billions in Revenue

The National Government’s ill-advised income tax cut in 2010 for higher earners has cost New Zealand over $4 billion in lost revenue, says New Zealand First.

“This was a totally misguided and irresponsible action that ignored the welfare of New Zealanders as a whole,” says New Zealand First Revenue Spokesperson Andrew Williams.

“In Parliament today Finance Minister Bill English struggled to provide adequate answers to questions on the subject and claimed additional revenue from GST, and property tax, offset the loss. The figures dispute everything he is saying.”

The Government reduced the tax rate on incomes over $70,000 from 38 per cent to 33 per cent in the 2010 Budget.

“Given all the cuts to public services in the four years since then, including conservation, biosecurity services, and a multitude of other cuts to agencies and important programmes, New Zealanders have paid a big price for this mismanagement of our finances.

“The New Zealand purse has also lost the benefit of dividend streams as the government sold state assets, against the wishes of a majority of New Zealanders.

“The lost revenue from three power companies – Meridian, Genesis and Mighty River - and Air New Zealand totalled about $146 million in the last six months alone. Imagine the services this revenue could have funded.

“The Government has ignored the overall welfare of most New Zealanders by cutting taxes for the higher earner and foregoing dividends by selling performing assets.

“The Government also stopped contributions to the New Zealand Superannuation scheme. The lost income from both the tax cuts and the dividends could have been invested for New Zealanders retirement super.”

ENDS

Income tax reduction

From 1 October 2010 the top income tax rate was reduced from 38 percent to 33 percent for incomes over $70,000.

The estimated cost of this income tax rate reduction is shown in the following table. Note that as the top income tax rate was reduced, the Crown would have received additional revenues through GST, excise duties and company taxes. This is because households would have spent some of their additional net disposable incomes, leading to further tax receipts in these other areas. Therefore, I have included two sets of numbers. The cost of reducing the top income tax rate, and the net cost after taking into account estimates of additional revenues through these other sources.

Year ended 30 JuneReduction in the top income tax rate from 38% to 33% (lost revenue ($m)Increase in revenue from additional GST, excise duties, and company tax revenues ($m)NET estimated cost of reducing the top income tax rate from 38% to 33%
9 months ended 30 June 2011642-132.0724
20121,079-166.3913
20131,092-168.3924
20141,202-185.21,017
Total of above ($m)4,015-651.83,578

The estimated cost of reducing the top income tax rate from 1 October 2010 through to 30 June 2014 is estimated at $4.0 billion. After taking into account additional GST, excise duties and company tax revenues, the net cost over this period is estimated at $3.6 billion.

Source: Parliamentary Library

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Greens: Russel Norman To Stand Down As Co-Leader

Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party’s Annual General Meeting in May. Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM.

“After nearly a decade as Co-leader, now is a good time to find a new challenge for myself, and to spend more time with my family” said Dr Norman.

“This is my ninth year as Co-leader and I think it’s time for a change. Now is a good time for new leadership for the Party. My replacement will start from a strengthened base and will have a full parliamentary term to establish himself in the role and take the Greens into government in 2017." More>>

 

Gordon Campbell: On The Eleanor Catton Rumpus

If anyone was in doubt about the accuracy of the comments made in India by Eleanor Catton, the reaction from some quarters here at home has gone a long way to proving her point… More>>

ALSO:

More Rent Assistance, Less State-Owned Housing: John Key Speech - Next Steps In Social Housing

"We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider. The social housing budget provides for around 62,000 income-related rent subsidies a year. We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year." More>>

ALSO:

The Future Of Work: Andrew Little - State Of The Nation 2015

In 2005 when I led the EPMU we worked together with Air New Zealand to find a way to keep engineering jobs that were heading overseas. A lot of these workers were people I’d known for years and they were facing not just losing their jobs but not being able to find the kind of work they do without going overseas. A lot of people were facing personal and financial upheaval.... More>>

ALSO:

Gordon Campbell: On The Sabin Case, The Pressures On Greece And (Songs About) Coyotes

Mike Sabin is a National MP, and the current chairman of Parliament’s law and order committee. Yet reportedly, he is being investigated by the Police over an assault complaint... However, the PM will not comment on any aspect of the story. More>>

ALSO:

Houses, ISIS, King (& Catton): PM Post-Cabinet Press Conference

The Prime Minister met with reporters to discuss: • Social housing, the Auckland housing market • The prospect of joining international forces to combat ISIS • David Bain’s compensation • The lowering of the flag for the King of Saudi Arabia's death ... More>>

ALSO:

Gordon Campbell: On Tomorrow’s Speeches By John Key And Andrew Little

The Key government has already kicked off the political year on a stridently ideological note, with Environment Minister Nick Smith choosing to lay all manner of sins at the door of the RMA. Tomorrow, the government will wheeling out its best salesman – Prime Minister John Key – to sell its plans for state housing… . More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news