Government backtracks on tax promise

National's Finance spokesman Don Brash is slating the Government's failure to deliver on its promise to shield most New Zealand taxpayers from tax hikes.

In Parliament today, Dr Brash attacked the Finance Minister on tax, pointing out that the number of taxpayers who face the top personal tax rate of 39 per cent is more than twice what Labour promised in its 1999 election campaign.

"Labour said only 5 per cent of taxpayers would be affected by any tax increase. The reality is nearly 300,000 New Zealanders - 19 per cent of fulltime workers and 10 per cent of the total number of taxpayers - are hammered by the 39 per cent rate.

"The only way Dr Cullen would get his 5 per cent figure would be to shift the top personal tax threshold to $80,000."

Dr Brash says the Government's miscalculation on taxpayer numbers clearly strengthens the argument for cutting the top personal tax rate.

"It is patently wrong that a person earning $100,000 with a dependent spouse and two children under the age of 13 effectively pays a thousand times as much income tax as somebody in the same family circumstances who earns $25,000.

"That hardly gives entrepreneurial and hardworking New Zealanders the incentive to grow their businesses and invest.

"When you add in the Government's other "taxes" and "levies" - the sherry tax, petrol taxes, the proposed energy tax, Kyoto tax and planned changes to gaming duties - the election promise of protecting "95 per cent of taxpayers" has a very hollow ring to it," says Dr Brash.

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