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Tax Cuts Needed Now

14 December 2004
PR 227/04

Tax Cuts Needed Now

Treasury's economic and fiscal update released today has highlighted the urgent need for the government to cut taxes, said Tom Lambie, President of Federated Farmers of New Zealand (Inc).

“The update shows the government is raising vast sums of money from New Zealand business and workers in a belief that it can spend other people’s money more wisely than business people and mums and dads," Mr Lambie said.

Treasury forecasts an adjusted operating surplus of $6.5 billion in the current year, with multi-billion dollar surpluses in the two following years.

"This money is being generated from tax rates and thresholds being set too high. As a very first step the Finance Minister should increase the personal income tax thresholds to an amount equivalent to 1999 levels," Mr Lambie said.

"For example, the $38,000 income threshold for moving from 19.5 percent to 33 percent tax has not changed for six years.

"A person on an income of $38,000 on 1 April 1998 whose salary increased by the rate of inflation (the consumers price index) would be on a salary of $43,017 in the third quarter of this year. That equates to an extra $677 in tax a year due to income inflated above the tax threshold," Mr Lambie said.

“Along with not reducing a single tax, levy or duty, the Finance Minister has failed to outline one initiative to improve the quality of government spending," he said.

ENDS

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