Cullen puts index-linked tax in the too-hard basket

Finance Minister Michael Cullen yesterday revealed what income tax thresholds would be if inflation were taken into account but said it would cost the Government more than $400 million a year to make the changes.

Cullen's response came after Act deputy leader Ken Shirley asked what the $38,000 and $60,000 income tax thresholds would be if these were inflation adjusted.

The minister said the present thresholds came in on April 1, 2002, and if adjusted would be $42,900 and $66,100.

Shirley asked the minister to concede Labour had broken its election promise of no rise in income tax for the 95 per cent of taxpayers earning less than $60,000.

"How many taxpayers now earn more than $60,000?" Shirley asked.

Cullen said people's incomes had increased under a Labour Government.

"The effect of any change would be, on those people over $42,900 up to $60,000-odd, $11.31 a week and for those above $66,100, $18.35 a week."

A Treasury and Inland Revenue Department report on the issue in March last year found it would cost about $400 million to make the changes.

- NZPA