MEDIA RELEASE

24 October 1999

Labour's planned tax grab bad for economy

Treasurer Bill English said Labour's planned $800 million tax grab would be bad news for the economy and a setback just as the country was getting back on its feet.

"Labour is planning to collect over $800 million more in taxes than what is forecast in the Pre-election Economic and Fiscal Update (PREFU). That is $800 million out of the productive part of the economy and out of New Zealand families' pockets. Instead Labour wants to put it towards more than 100 policy reviews and new bureaucracies.

"If we want to compete to keep people and businesses in New Zealand who can help grow the economy, we have to maintain the advantage we have not spend it away.

"The PREFU incorporates National's planned tax reductions, which will cost $395 million next year and which Labour has promised to reverse. In addition, Treasury's tax ready reckoner shows Labour would collect a further $490 million tax next year by increasing the top tax rate above $60,000 and increasing Fringe Benefit Tax.

"Dr Cullen has said that he will be able to forecast operating balances as good as those included in the PREFU, in spite of all the spending promises Labour is making. His $800 million tax grab will be one way he'll be paying for those promises.

"Labour is trying to bribe people with their own money. What they're doing amounts to telling every New Zealander they're going to get a present, but then asking taxpayers for $350 each to pay for it.

"Labour's high tax and high spending policies are backward-looking and at total odds with its talk of supporting business and creating jobs.

"Policies that will take us forward include lower taxes, lower costs for business, and flexible labour markets," said Mr English.

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