Tax Credit Package Punishes The Productive

The Prime Minister's announcement that she will once again increase abatement rates on Working For Families tax credits will punish low-earning New Zealanders who increase their productivity, says the New Zealand Taxpayers' Union.

"Low-earning New Zealanders who choose to work harder, achieve a promotion, or take on a side-hustle will be whacked by higher effective marginal tax rates under Jacinda Ardern's new welfare package," says Union spokesman Louis Houlbrooke.

"In her enthusiasm to increase Working For Families payouts, the Prime Minister has intensified the productivity-killing effects of the policy. She is offsetting the cost of her generosity by increasing the abatement rate for the Family Tax Credit from 25% to 27%. Ten years ago the abatement rate was just 20%."

"The abatement rate is effectively a marginal income tax rate. The combination of income taxes and abatement rates on tax credits means some Kiwis are already paying effective marginal tax rates of more than 50%. Experts have slammed the way this traps people in the welfare system by removing incentives to work."

"Instead of fixing the problems with Working For Families, the Prime Minister is trapping families in poverty."

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