Labour urged to honour tax pledge

The United Future Party is calling on the Government to cut taxes and says it has broken a 1999 election promise.

United Future's finance spokesman, Gordon Copeland, said the Government had effectively raised taxes by not adjusting the tax brackets in line with inflation.

"Labour, by doing nothing, has broken its 1999 promise not to increase taxes," he said.

"By March 2005 taxes will have increased in real terms for all taxpayers, except for the few part-timers who earn less than $9500, by between $6.25 and $96.25 per month."

Mr Copeland issued statistics showing that by March 2005 there would be another 44,000 taxpayers in the 33 cent bracket than there were in 2000, a 9.9 per cent increase.

There would be 115,000 more taxpayers in the 39c bracket, a 59.6 per cent increase.

"The Government's failure to index the tax bands for inflation means that taxpayers' marginal tax rate is increasing as wages and salaries rise to offset the movement in the consumer price index," Mr Copeland said.

He produced the Labour Party's 1999 election campaign "pledge card", signed by Prime Minister Helen Clark, which stated there would be no tax increase for the 95 per cent of taxpayers earning under $60,000 a year.

Mr Copeland said inflation between 2000 and 2005 would be about 13 per cent, and to preserve the thresholds the brackets should be adjusted.

He has drafted an amendment to a tax bill now before Parliament to change the thresholds from $9500 to $10,750, from $38,000 to $43,000, and from $60,000 to $68,000.

He said the Government could afford the $714 million cost of the changes because it collected $4.5 billion more in tax during the last three years than it had expected.

He did not expect Finance Minister Michael Cullen would accept the changes, and the Green Party would not support them either so his amendment was likely to be defeated.

He was right. A spokeswoman for Dr Cullen said the plan would cost $900 million a year, and would invoke the financial veto on non-government budget proposals.

"The Government has got higher policy priorities than this."

- NZPA