Thursday 22nd May 2008

Budget Tax Cuts Phoney for Many: Copeland

Independent MP Gordon Copeland today placed a 'half-hearted' label on Dr Michael Cullen's Budget 2008 tax cut announcement.

"Dr Cullen will change the tax bracket for the 33 cent rate from $38,000 to $46,000 and for 39 cent bracket from $60,000 to $70,000 from 1 October this year. However an adjustment of that size does not even cover the fiscal drag effect which has occurred since 1 April 2000!

"The fact is that cumulative inflation from 1 April 2000 to 31 March 2008 is 23.8%. Accordingly, if Dr Cullen wanted simply to preserve the current rates of tax in real terms he would need to adjust the bracket for 33 cents from $38,000 to $47,000 and the 39 cent bracket from $60,000 to $74,000 on 1 October.

"His failure to do that means that in real i.e. inflation adjusted, terms he is not actually reducing tax at all for the 1 million New Zealand tax payers who currently earn more than $40,000 per annum, even when the drop in the Low Income Rebate (from 15% up to $9,500 to 12.5% up to $14,000) is taken into account.

"I have to conclude that these tax cuts are phoney for those 1 million tax payers. After eight and half years of inaction these tax payers are again left out in the cold."

ENDS

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