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

 

Parliament Today:

The Kids: OECD Report Shows Huge Impact Of Poverty On Education

A new report from the OECD has again highlighted the negative effects of poverty, showing that disadvantaged children in New Zealand are more than six times more likely to underachieve in maths than children from wealthier homes. More>>

ALSO:

Pacific: NZ Pledges $500,000 To Help Address Zika

“With the Zika virus now confirmed in a number of Pacific countries, New Zealand is committed to helping limit the impact and spread of the virus in the region,” says Mr McCully. “New Zealand will provide $250,000 as a contribution to the WHO to implement the Pacific Zika Action Plan, and a further $250,000 to enable countries in the region to respond rapidly if required." More>>

ALSO:

Labour: Police Commissioner 'Doesn’t Get Force Needs'

The Police Commissioner has let down the public and his own force by insisting the police have what they need despite it taking a year to solve a burglary and overwhelming number of officers saying they are under-resourced, says Labour’s Police spokesman Stuart Nash. More>>

ALSO:

Gordon Campbell: On The US Pressure To Expand Our Role In Iraq

Foreign news services are being more forthcoming about what the “next 12 months” will entail – essentially, the defence ministers will be under US pressure to increase their “training” role preparatory to an assault on the city of Mosul in northern Iraq. More>>

ALSO:

Parliament Restarts: Prime Minister’s Statement

Our policy agenda and legislative programme will reflect the Government’s four priorities: • to responsibly manage the Government’s finances • to build a more competitive and productive economy • to deliver better public services to New Zealanders, an • to support the rebuilding of Christchurch. More>>

ALSO:

NZEI Survey Report: Special Needs Students Missing Out

The survey revealed that around 16 percent of students were on schools’ special needs registers, but nearly 90 percent of schools’ special needs coordinators did not believe there was adequate support for students and their learning... More>>

ALSO:

Interim Report: Waitangi Tribunal On Ture Whenua Legislation

Labour on Proposed changes to Maori land rules: “To have Treaty Negotiations Minister Chris Finlayson dismiss findings as ‘bizarre’ is totally disingenuous and disrespectful. What’s bizarre is Maori Development Minister Te Ururoa Flavell stubbornly pushing through this Bill before the Waitangi Tribunal has even completed its report..." More>>

ALSO:

Spy Update: Appointment Of GCSB Acting Director

GCSB Chief Legal Advisor Lisa Fong will become the Acting Director of the Government Communications Security Bureau (GCSB) from 15 February 2016, Minister Responsible for the GCSB Christopher Finlayson announced today. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news