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Colin Craig’s tax figures do not add up and are dishonest

Media Release
Friday 29 August 2014
ACT Leader Dr Jamie Whyte

Colin Craig’s tax figures do not add up and are dishonest

“Colin Craig’s tax plan is to have two rates of income tax: 0% up to $20,000 and 25% above that. This will leave a $6.4 billion hole in the budget even before the new spending proposed by the Conservatives. The Conservative tax promises are dishonest” said Dr Jamie Whyte.

“Using Treasury figures, ACT calculated that to get the same revenues with a tax-free threshold of $20,000 the rate above $20,000 would have to be 34%, a significant tax increase for middle New Zealand.

At a Papakura combined churches meeting of candidates on Wednesday, Conservative Party candidate Kevin Stitt made a point of immediately correcting the ACT candidate’s claim that the Conservative Party’s flat tax rate will be 34%. Mr Stitt told the audience that the Conservative Party flat tax rate above $20,000 was 25%. When questioned again on this, he confirmed that the flat rate tax rate was 25%” said Dr Whyte.

“The budgetary mathematics of Colin Craig’s 0% and 25% rates are brutal.

Total taxable income in New Zealand is $143.5 billion. Of this, $54.8 billion is from income below $20,000, from which Craig would collect no tax. All income tax will be levied on income above $20,000, which amounts to $88.7 billion. 25% of $88.7 billion is $22.2 billion. That is how much income tax will be collected on Craig's tax plan.

But income tax today totals $28.6 billion. So Craig's plan will require the government to reduce spending by $6.4 billion

“To fund a $6.4 billion dollar tax gap the Conservatives must slash Super, hospitals and education. There is no other spending that comes near to seven billion dollars.

“The Conservatives promises on tax are either silly or dishonest.

“Even their proposed 25% flat tax increases marginal tax rates for middle-income families already hit over the head by the Working for Families abatement rate of 25%. Many ordinary families and second earners will face an effective marginal tax rate of 50% under Colin Craig’s proposals” said Dr Whyte today.

“ACT was able to produce a fully costed policy using Treasury figures to reduce the top tax rate to 24%, the company tax initially to 20% and then to 12.5% by 2020 in its Alternative Budget Analysis. ACT did this by cutting corporate welfare and cutting middle-class welfare by $4 billion. These tax and spending reforms will boost the growth rate by at least one percentage point: that is, by at least one third,” said Dr Whyte.

© Scoop Media

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