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The New Government Should Heed Treasury's Advice

media release

Thursday 4 December 2008

The New Government Should Heed Treasury's Advice

"The Treasury's advice to cut taxes on personal income and to rely more heavily on consumption taxes like GST is to be welcomed," says Alex Penk, Maxim Institute's Policy and Research Manager. The advice is contained in its Briefing to the Incoming Minister of Finance, released today.

"The Treasury's medium-term advice is in line with recommendations we made earlier this year in our discussion paper, Is it Just Tax? The shaping of our society," says Alex Penk. "We argued that directions for tax policy reform should include lower and flatter taxes, and altering the tax mix to rely less on personal income taxes and more on consumption taxes."

"These changes would make the tax system fairer and reduce the impact taxes have on taxpayers' freedom. The Treasury's advice provides an additional line of support for these policies. It has identified a need to boost productivity to improve quality of life for all New Zealanders, and it believes these policies will help achieve that goal."

"In addition the Government should consider reform of Working for Families, with its 'poverty traps' and 'marriage penalties.' Reviewing Working for Families would help by removing barriers to productive activity that increases earnings," says Mr Penk. "Applying higher effective marginal tax rates to three quarters of New Zealand families with children doesn't make economic sense."

"It is pleasing to see advice that looks beyond the short-term economic challenges we're facing, and focuses on positioning New Zealand well for the future. We look forward to seeing the new Government act on this advice," says Alex Penk.


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