23 August 2005 - Alliance - Auckland

National's tax cuts: a massive employer subsidy

Instead of confronting the chronic problem of low wages, National's tax cuts amount to a $4 billion annual subsidy to employers. Wages will stay low while taxpayers pay for their own income rise with cuts to public services and through borrowing at market interest rates from overseas bankers.

"Some deal!" says Auckland Alliance spokesperson, Len Richards, "National looks after its friends. It is the rich and employers who benefit most from Brash's tax cut plans."

Labour has joined the unseemly auction for the votes of the middle class with a $1.5 billion subsidy for working families with children. This plan at least has the saving grace of targeting children. But the children of the poor are left out. Labour's plan will not extend to beneficiaries. According to Child Poverty Action 130,000 children live in real poverty.

Mr Richards said that under the Alliance tax policy, the first $10,000 of income will be tax free. This applies to everyone, but it would most benefit those on low incomes, including pensioners and beneficiaries.

Alliance tax spokesperson, Professor Jim Flynn, explained in his recent tax policy press release: "At present, Kiwis pay $1530 on their first $10,000. So this amounts to a new deal for pensioners and beneficiaries."

Professor Flynn said the Alliance tax policy is the kind of progressive tax system that existed in New Zealand before Labour and National decided to benefit the rich and attack the most vulnerable.

"The Alliance policy represents a significant redistribution of wealth. The 85,000 Kiwis who make more than $100,000 a year would, rightly, bear a much greater burden. Someone on $200,000 a year would pay an extra $18,460 in tax," said Professor Flynn.

The Alliance would use taxes to redistribute wealth but ultimately the way working class people can obtain a greater share of the wealth that they create through their work is by increases in salaries, wages, pensions and benefits.

"Unpaid people contribute through their work raising children and through other unrecognised contributions to society, so they should not be left out," says Mr Richards.

"The Alliance will fight for an increase the minimum wage to $15 an hour, abolition of youth rates and strengthened protection for casualised workers. Workers' rights to organise should be extended, including the right to strike. This will enable workers to gain a bigger share of the cake, rather than just scramble for the crumbs falling off the table."

NOTE: Tax table below

NOTE: The incomes in this Table refer to individuals not families. For example, a
family with two earners that each make $41,000 would pay no extra tax.

MARGINAL TOTAL TOTAL TOTAL
INCOME TAX % INCOME TAX % TAX $ DIFFERENCE

0 - 10,000 nil 10,000 nil nil Up to $1530

[No tax on the first $10,000 (and this includes those on super and other benefits)
means that all on that income will be forgiven the $1530 they pay at present]

Almost a million
10 - 20,000 24 20,000 12.00 2,400 Kiwis will average $1380 less tax
------------------
360,000 Kiwis
20 - 30,000 26 30,000 16.67 5,000 will average
$980 less tax
-------------------
309,000 Kiwis
30 - 40,000 30 40,000 20.00 8,000 will average
$300 less tax

[The 75% of New Zealanders under $41,000 will pay less tax]

253,000 Kiwis
40 - 50,000 40 50,000 24.00 12,000 will average
$280 more tax
-------------------
141,000 Kiwis
50 - 60,000 42 60,000 27.00 16,200 will average
$1080 more tax
-------------------
104,000 Kiwis
60 -70,000 46 70,000 29.71 20,800 will average
$1880 more tax
-------------------
141,000 Kiwis
70 -100,000 50 100,000 35.80 35,800 will average
$3800 more tax
-------------------
85,000 Kiwis
100,000+ 54 200,000 44.90 89,800 will average
$18,460 more tax

ENDS

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