National reveals tax cuts

Don Brash

National is proposing widespread changes to taxation rates if elected to government.

National leader Don Brash said the low tax rate of 15 cents in the dollar would move from $9000 to $12,500 and there would be a 19 cent tax rate between $12,500 and $50,000.

Income between $50,000 and $100,000 would be taxed at 33 cents in the dollar and the top rate of 39 cents would kick in after that.

Company tax would also be reduced to 30 cents in the dollar by 2008, with the personal rates being phased in between April 2006 and April 2008.

The withholding tax rate for secondary employment will be 19 cents in the dollar.

The tax changes along with targeted family assistance would cost about $3.9 billion by 2008.

"These changes will give very large reductions in the tax rate on extra work and income faced by around half a million working New Zealanders, and a significant income boost for most working people," Dr Brash said.

Dr Brash estimated that a single person earning $38,000 would get a tax cut of $630 a year from April next year, rising to $690 a year from April 2007.

Someone earning $50,000 a year would get a cut of $1470 from April next year, rising to $2370 from April 2007.

Dr Brash said that over time National will replace Labour's Working for Families package with a families tax package.

"Nobody will be worse off from this change -- we are comfortable with this level of support. But the method of delivery must change."

During the interim period a 20 per cent abatement rate would apply to the working for families assistance on top of National's 19 cents in the dollar in earnings up to $50,000.

"This will mean that even with income support abating, lower income earners will face an effective marginal tax rate no higher than the top rate of personal income tax of 39 per cent," Dr Brash said.

"Under Labour, those around the average wage and up to $60,000 of income will face a 53 per cent effective marginal tax rate as their income support abates. Those earning over $60,000 will face a 59 per cent tax rate."

Dr Brash gave examples that said working families would be better off with National.

They would also save at least $200 a year because National would not implement Labour's plans to introduce a carbon tax in 2007.

The increases in after-tax wages would also flow through to superannuation payments with a couple getting an increase of about $320 in April next year rising to about $560 from April 2008.

"National's fair tax and families package provides a lower tax burden and restores the incentive to get ahead from your own efforts. It signals to hard working New Zealanders that you too can share in the benefits of a growing economy," Dr Brash said.

- NZPA