First $3000 tax free, new thresholds under United’s tax policy

Peter Dunne

United Future today promised to lift thresholds on income tax from 2006 and make the first $3000 of earnings tax-free.

It also said it would introduce income splitting for parents raising dependent children and take GST off rates.

United Future leader Peter Dunne said in a prepared speech to the party's annual conference in Auckland that under its package, the average family household would be $163 a week better off.

He said a family earning the average wage of just under $43,000 would get a tax cut of $35 a week.

A typical middle income family, on $55,000 a year, would get a tax cut of $66 a week.

Those on an income of $65,000 would get just under $100 a week.

According to budget figures, current average household gross income from all sources was just over $82,000 and a family on that income would be $163 a week better off under United Future's policies, Mr Dunne said.

He said Labour had only moved on tax thresholds because United Future's finance spokesman Gordon Copeland had "pushed them".

"That leaves a clear message - put United Future anywhere near government and taxes come down. While others talk, we act."

Mr Dunne said United Future had achieved the key points of its confidence and supply agreement with the Government, and of its last election policy.

"And as (Finance Minister) Michael Cullen admits, we have kept our own identity, achieved our key policies, voted against the Government more often than the Greens, and still ensured the political stability that has delivered New Zealand the most sustained prosperity of recent times.

"Not for us the over-riding obsession with trivia - with tennis balls, with stray Iraqis and every passing scandal - the oppressive prism of political correctness and having no policy at all."

Mr Dunne said United Future stood on the "brink" of government and was the preferred partner of both Labour and National.

Under its tax policy:

* The first $3000 of earnings would be tax-free -- as part of the Working for Families package;

* Tax thresholds would be increased by $5000 to offset the increase in inflation. That is, the 33 per cent rate would apply to income over $43,000 rather than $38,000 and the 39 per cent rate would apply to income over $65,000 rather than $60,000;

* Aim to further lower tax rates as economic conditions allowed with the goal of establishing a tax rate that was comparatively flat;

* Introduce income-splitting for couples raising children;

* Reduce company tax to 30 cents in the dollar over the next three years;

* Increase the tax rebate on donations from individuals to charitable organisations from $630 per annum to $6300 per annum as a first step with comparable increases for companies.

United Future said it would also explore ways for families to get their Working for Families entitlements in ways that did not resemble benefit payments. For instance, as a lump sum at the end of the tax year, as an adjustment to take-home pay, diverted into a workplace savings scheme or capitalised in advance to be used to increase equity in a home.

It said it would freeze interest on student loans and write off a portion of the debt for parents for two years after the birth of a child.

Other areas of policy included channelling a significant portion of fuel taxes collected in a particular region to improvements to roads in that region.

Tax collected from tobacco and alcohol products would be directly channelled into the health budget to recover the costs associated from their use.

- NZPA