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

Gordon Campbell:
On Gaza And Burning The Israeli Flag

One of the selling points in New Zealand’s campaign for a temporary seat on the Security Council is that we have a pluckily independent voice to offer on international conflicts.

This image is not entirely self-delusional. When we did occupy a temporary UN Security Council seat in the 1990s, New Zealand was forthright about the need for the international community to actively respond to the Rwanda genocide. On April 14, 1994, New Zealand, Nigeria and the Czech Republic were the only nations to call for a forceful UN intervention to halt the killings. It was a proud moment in the diplomatic record of the Bolger government.

What then, is the current National government doing with respect to the slaughter in Gaza? More>>

 

Parliament Today:

TAIC Report: Urgent Recommendations After Melling Rail Accident

The Transport Accident Investigation Commission has made four urgent recommendations to KiwiRail following the accident two months ago (27 May) when a Matangi passenger train collided with a stop block at Melling Station, Lower Hutt. More>>

ALSO:

Red Tape: Local Regulations Go Under Microscope

The Government says it is accepting nearly all of the recommendations the Productivity Commission has made on ways to improve local regulations. More>>

ALSO:

Spending Questions: Claudette Hauiti To Step Aside At Election

National Party President Peter Goodfellow confirms that he has received notification from List MP Claudette Hauiti that she plans to step aside at the 20 September election. More>>

ALSO:

EPA: Board Of Inquiry Rejects Basin Flyover By Majority Of 3 To 1

The independent Board of Inquiry delegated to decide on the Basin Bridge Proposal has, by a majority decision (3 to 1), cancelled the Transport Agency’s Notice of Requirement and declined its resource consent applications for the construction, operation and maintenance of a flyover on State Highway 1 in Wellington City... More>>

ALSO:

Gordon Campbell: On The Non-Apology To Tania Billingsley

The refusal by Prime Minister John Key to issue a personal apology to Tania Billingsley has been accompanied by an array of excuses... Yesterday though, Key’s choice of words indicated that an apology was the last thing on his mind. More>>

ALSO:

Conventions: Winston Peters On The Nation

Winston Peters opens door to standing in East Coast Bays electorate, says it's an "exciting point" and he's thinking about it. "I’ve had a whole lot of people writing to me and calling up and saying ‘why don’t you have a go in East Coast Bays’." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news