Nats’ tax policy for ‘squeezed middle’

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

National has released what will likely be the key element of its election campaign — a tax policy designed to bring relief for the group it calls the “squeezed middle”, with other entitlements and tax reductions aimed at minimum-wage workers.

Announcing the policy yesterday, National leader Christopher Luxon said the package pulled together a number of components — some of them already announced — and would “put money in the back pockets of New Zealanders as part of a prudent, fully funded and balanced tax plan”.

The centrepiece of the package, the “Back Pocket Boost”, would see families without children earning less than $120,000 a year get up to $100 a fortnight more, and those with children up to $250. As much as $150 of that will come from childcare subsidies.

A full-time, minimum-wage earner gets an extra $20 a fortnight, which Luxon describes as “better than a few cents off carrots and a couple of beans”, a dig at Labour’s plan to scrap GST on fruit and vegetables.

The party’s finance spokeswoman Nicola Willis says the $14.6 billion policy over four years would be funded with $8.4bn of cuts and four new revenue streams it says will bring in $6.2bn — a 15 percent foreign buyer tax on houses worth over $2m, user-pays immigration levies, closing a tax loophole for online gambling, and ending the commercial building depreciation tax break.

National would cut nearly $1bn a year from government departments and consultants — on top of Labour’s cuts announced on Monday — while ending free or half-price public transport for children, disabled people and young people.

National is promising to inflation-adjust tax brackets and increase Working for Families funding with a rebate of 25 percent to families earning under $140,000 a year who are paying for early childhood education, which would max out at $3900 annually.

Labour has responded by claiming National’s cuts to public spending in its “dodgy tax plan” would threaten public services, and that allowing in foreign buyers again would “pour petrol” on the housing market.

Prospective coalition partner Act has also criticised the package which it described as just “loose change”, adding that it could have come from a Labour Finance Minister.

National has been careful about the timing of its announcement and it is clear that a lot of thought has gone into the package. With the election seemingly National and Act’s to lose, the key imperative is not doing anything that would change the trend of the polls. This policy looks tailor-made for that — it is squarely aimed at the middle ground where New Zealand elections are won and lost.