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Tax debate needs an audit

Sunday 25th Jul 1999

Richard Prebble

Both National and Labour are using shonky figures in the tax debate, according to ACT Leader and former Associate Finance Minister Richard Prebble.

"Bill English and Michael Cullen are both making up figures for their tax and social spending promises," Mr Prebble said. "Neither MP wants to blow the whistle on the other because it would show that their claim is also absurd.

"Let me show how false the campaign promises are. A 1% tax cut would cost no more than $300 million, and not the $400 million claimed by Bill English - answers given by the Treasury show he is 25% out.

"His claim for a matching $400 million in social expenditure is even more ludicrous. The only explanation for the figure can be that it's $50 million more than Labour's and he believes it shows National cares. Just in this year's budget there is allowance for $600 million more spending, yet he is claiming only $400 million over 3 years. In the last 6 years on average National has increased social spending by $100 million a year. So $400 million in 3 years would represent a massive cut.

"Labour doesn't point this out because to do so would be to demonstrate that their claim that they can finance increased social spending from the at maximum $330 million extra from 1% tax increase is absurd. Labour's ACC promises alone are conservatively estimated to cost $1 billion. Labour last election themselves estimated that the cost of their extra social spending would be $3 billion, and that doesn't include the ACC promise.

"National's promise to match tax cuts with social spending is also not connected to reality. If National had matched tax cuts to social spending over the last 6 years, we would now have a flat tax rate of 17 cents in the dollar.

"National and Labour both need ACT to keep them honest," Mr Prebble said.

ENDS

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