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Tax cuts won't cover rising costs for vulnerable

Media Release
For immediate release

22 May 2008

Responsible tax cuts but they won't cover rising costs for the most vulnerable.

The Government's announcement of tax cuts and adjustments to Working For Families and National Superannuation acknowledges the needs of many New Zealanders.

Organisations in the tangata whenua, and community and voluntary sector today congratulated the Government on a responsible approach to the tax cuts as they had been done in a way that protect community services.

"The tax cuts are responsible but unfortunately it is very unlikely the tax cuts will provide substantial relief from rising prices," Therese Quinivan, Director of Community Housing Aotearoa says.

"Food price inflation is running at six per cent, and power and petrol prices have really hurt the most vulnerable in our communities," says Jo Lake, National Executive Officer of Presbyterian Support New Zealand.

A Fairfax poll earlier this week showed New Zealanders were looking for at least $50 a week in the hand to make a real difference to their household budgets. Some 30 per cent of voters wanted $60 and $80 a week in tax cuts, according to the poll.

About $45 billion of mortgage debt comes up for refinancing over the next year, on to rates which right now are about 1.5 percentage points higher than borrowers have been paying - representing about an 18 per cent increase in their mortgage bills.

Dave Henderson, Coordinator of the Association of Non-Governmental Organisations of Aotearoa (ANGOA) says any larger tax cuts would be irresponsible in the current environment.

"There is always concern among organisations in the tangata whenua, and community and voluntary sector when political parties start talking about tax cuts because that often means cuts to services or increased borrowing neither of which are healthy for our communities in the long run," Dave Henderson says.

Wendi Wicks, National Policy Researcher from the Disabled People's Assembly (DPA) says with the Government announcing $750 million increased health spending and the tax cuts, Sector organisations would be keen to see the Government's promise to fully fund "essential Sector services" entrenched in policy or legislation.

"To this point, the Government has not fully funded the services that it contracts the Sector to provide in all cases. The announcement in February was encouraging but the intention to fully fund essential Sector services is not entrenched in legislation or even set down in policy. At the moment it relies on the good will of the Government of the day to fulfill this promise.

"If any political party is serious about making sure communities are well served by Sector organisations, they will make sure that full funding is part of their policy," Wendi says.

Ric Odom, Chief Executive Officer of YMCA New Zealand says the value of Sector services increases in tough economic conditions: "Right now, middle income New Zealanders are hurting and there is an increase in demand for Sector services, particularly in the Auckland area. Sector organisations play a vital role in our society," Ric says.

ENDS

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