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National’s Tax Cuts At Heart Of Budget 'Crisis'

27 April 2012

National’s Tax Cuts At Heart Of Budget ‘Crisis’

New figures from the Parliamentary Library show the National Government’s tax cuts to the top 10 percent of income earners are costing $700 million-$800 million a year while it pleads poverty and cuts services, Green Party Co-leader Russel Norman said today.

Figures from the Crown’s Year End Financial Statements for 2010/11 show that National’s 2010 tax package cost $1.1 billion in the first nine months. The new data shows that most of that cost is due to the reduction of the 38 percent tax rate to 33 percent, which only benefited the wealthiest 10 percent of New Zealanders.

“It is wrong for the Government to cut important public services and support for people to get an education at the same time it is borrowing $800 million a year for tax cuts for the wealthy,” said Dr Norman.

“Two years ago, National told us it could afford these so-called ‘fiscally neutral’ tax cuts.

“Now, it is crying poverty and telling New Zealanders they will have to pay with cuts to services and student loans.

“National has manufactured a crisis by committing itself to an arbitrary goal of eliminating the deficit in 2014/15 while cutting revenue needed to get there.

“Did National not realise its unaffordable tax cuts for the rich would crash the budget, or did it cynically reduce government revenue to give it an excuse to cuts services in the future?

“Neither option can give New Zealanders confidence in the economic management of their government,” said Dr Norman.

Additional Information:

Summary table of cost of reducing the income tax rate over $70,000 from 38% to 33%
RESULTSEstimated $m change (from current state)Estimated cost after offset effects are taken into account ($m)
Estimated income tax - Method 1 ($m) 2010 data837708
Estimated income tax - Method 2 ($m) 2010 data797675
Estimated income tax - Method 3 ($m) 2011/12 data862729
Source: Parliamentary Library


The Green Party's alternative plan for our economy:
http://www.greens.org.nz/greenjobs

Financial Statements of the Government of New Zealand for the Year Ended 30 June 2011:
http://treasury.govt.nz/government/financialstatements/yearend/jun11/fsgnz-year-jun11.pdf



ENDS


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