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Bad econimics and feeble politics

Labour 2000 web site

Labour finance spokesperson Michael Cullen has dismissed National's proposed tax cut as bad economics and feeble politics.

"This tax cut proposal would deliver little to those on modest incomes. Superannuitants would get nothing out of it, because of the fall in the floor of New Zealand Superannuation. A person on $20,000 a year would get about $2 a week, with those on $40,000 a year or more getting $10 a week.

"Mr English has made it clear that those on under $40,000 can expect nothing further at all from a National-Act Government. On the other hand, a person on $100,000 a year can look forward to a further tax cut of in the order of $35 a week.

"The cost of $400 million cannot be afforded from the 1st of April next year. It will run the fiscal operating surplus dangerously low and at the same time is not justified by the state of the current account position, which requires the Government to build stronger surpluses over the next two to three years.

"Social service expenditure obviously has to suffer as a consequence of this tax cut proposal. The argument that there will be social spending as well, ignores the fact that money is still available for other purposes, if not given away by means of a tax cut.

"National's attempt to buy its way back into power by means of this proposal is going to be very feeble politics indeed. The average voter gets so little out of this, it is not going to be serious factor in their determination about they are going to vote.

"Having suffered for so long from National's demolition of social services, they are not going to be fooled now by a miserable tax cut which they know is going to result in poorer social services in the long term.

"Labour is quite clear. This tax cut will not occur from the 1st of April next year.

"This is no time to be trying to buy one's way back into office with the people's own money. What is needed is a government committed to strengthening New Zealand's economy by transforming its base, a government committed to strengthening social services and a government committed to responsible fiscal management.

"National's proposal fails on all three counts."

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