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Tax cuts mean job losses and falling GDP growth

Cold water has been poured on Act-National claims that tax cuts boost the economy.

Research by the Parliamentary Library shows that exceptionally poor economic performance has followed the last three tax cuts.

Alliance revenue spokesperson John Wright says GDP growth and employment have fallen following each of the last three tax cuts.

"The mantra chanted by Act and National that tax cuts are good for the economy have been proven to be wrong," John Wright said.

Taxes for high income earners were cut on 1 October 1988, 1 July 1996 and 1 July 1998. Each tax cuts was immediately followed by deteriorating economic performance and falling employment.

"Whenever taxes are cut, the growth graphs point downwards and just keep going," John Wright said.

"After the 1988 tax cuts New Zealand lost jobs and job growth slowed again after both the 1996 and 1998 tax cuts and eventually slipped into negative after the 1998 tax cuts.

"The rate of GDP growth also slowed after all three tax cuts and slipped into negative after both the 1988 and 1998 tax cuts.

"If Act and National again try to bribe their way into office by spending money we haven't got on tax cuts for the wealthy they will again drive the economy into recession and destroy even more jobs."

Documents available from Alliance Office

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