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Labour leaves out the poor

19 August 2005

Labour leaves out the poor

Labour's tax adjustments once again leave out 175,000 of the country's poorest children by providing no relief for sole parents (mostly women) and other families depending on benefits to survive.

The Alliance supports moves to help families with children, but the way to do it is to bring back a universal child benefit and a more progressive taxation system that redistributes wealth to help the poorest in our community, says Alliance co-leader Jill Ovens.

"We don't think families earning more than $80,000 to $110,000 a year need a tax break. It's the families struggling to get by on $15,000 a year that need help.

"But we do not buy right-wing arguments that Labour's announcement creates welfare dependency for middle to higher income earners. To suggest that Cullen's policy creates a poverty trap for people on $110,000 is just rubbish."

The Alliance wants to restore a fair tax system that would most benefit those on low incomes, including pensioners and beneficiaries. The first $10,000 of income would be tax free and the kind of progressive tax system that existed in New Zealand before Labour and National decided to benefit the rich and attack the most vulnerable.

Alliance tax spokesperson Jim Flynn says that under the Alliance policy, almost a million Kiwis who earn between $10,000 and $20,000 would average $1380 less tax than they do now. Another 670,000 would enjoy substantial tax breaks. Those on $25,000 would pay $980 less and those on $35,000 would pay $300 less.

"The Alliance would reduce income tax for the 75% of New Zealanders who make less than $41,000 a year. This refers to individual income, so a family with two earners who each make $41,000 would pay no more tax," Professor Flynn says.

Alliance marginal tax rates increase from 40 cents in the dollar after $40,000 up to 54 cents in the dollar for income over $100,000. This represents a significant redistribution of wealth.


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