Reserve Bank shows unaffordability tax cut
Hon Jim Anderton
Member of Parliament for Wigram
09 December 2010 Media Statement
Reserve Bank statement shows unaffordability of cut in top tax rate
It’s National’s fault.
The cuts in the top tax rate from 39 cents down to 33 cents since the 2008 election are helping to put New Zealand’s recovery on hold, Progressive Wigram MP Jim Anderton says.
The Reserve Bank today identified “elimination of New Zealand’s fiscal deficit” as a factor that’s adding pressure to interest rates and keeping the dollar high.
“The fiscal deficit is caused because the government reduced the top tax rate. 42% of the tax cuts since the 2008 election went to the top ten per cent of income earners.
“If the government had only pushed out the threshold at which the highest tax rate applies, and not cut the top tax rate from 39 cents to 33 cents, most of the fiscal deficit would not exist.
“Because of the irresponsible cut in the top rate, interest rates are higher and the dollar is higher - putting pressure on our exporters and making it cheaper for foreigners to come in and buy up New Zealand.
“This is National’s idea of economic management: The recovery has stalled. Business investment is ‘below average.’ Households are not spending. Homes aren’t selling. House prices are falling. Unemployment is higher than it was when National took office and wages have stalled.
“The Reserve Bank today made clear that this is all National’s fault. But will the Prime Minister accept that the buck stops with him? Don’t hold your breath,” Jim Anderton says.