National signals tax cut for working NZers in first budget

Don Brash

A National government would give "every working New Zealander" a tax cut in its first budget and would reduce tax for those on higher incomes as circumstances allowed, National leader Don Brash said today.

Dr Brash indicated in a speech today that National would implement a staggered introduction of tax cuts, saying the National Party had no intention of "triggering a lift in interest rates with too rapid a cut in taxes".

Earlier this year, Dr Brash indicated a National Government would cut taxes first for low and middle income working families, with gradual tax reductions for those in the higher income tax bracket.

He also said National would reduce the company tax rate to at least match the Australian rate of 30 per cent.

In the past couple of days he had been signalling National's intention to draw "clear battle lines" between National and Labour on tax at the next general election.

Dr Brash said he would not today release details of the tax policy National would take into the election.

But the updated Government accounts made it clear "that there is room for the Government which is elected next year to deliver a tax cut for every working New Zealander in its first budget".

The scale and focus of such cuts would depend on the state of the economy at the time, he said.

He also said tax cuts would take many years and more than one term of government.

"But if we slowly but consistently work to reduce taxes over time, large benefits will emerge for all New Zealanders," Dr Brash said in his prepared speech notes.

"With the biggest budget surplus in our history, there is scope for a tax cut for all New Zealanders," he said.

National recently announced its U-turn on the superannuation fund, saying it would now retain it if elected to government.

Dr Brash today said the current fiscal position would allow a government to give tax cuts as well as contribute to the super fund.

National was committed to a broad-based but lower-rate tax structure, he said.

Tax rates were too high and the higher tax rates cut in at incomes that were far too low. In the United States, the top tax rate cut in at the equivalent of $450,000, not the $60,000 in New Zealand.

Taxation changes would involve both personal tax and company tax, he said.

New Zealand required taxation changes to provide greater incentives for investment, enterprise, entrepreneurship and hard work.

Another important goal of its tax reforms was to reinforce social stability by lessening the burden on the hundreds of thousands of middle-income families who were taxed as if they were "the new rich".

There could be targeted reductions in tax on families.

"It could also mean tax relief for those who reduce the burden on the State by meeting the costs of their own medical care or the costs of their children's education.

"That could be achieved through either tax deductions or rebates on such expenses."

Dr Brash said National could not immediately make huge steps in the directions he had alluded to.

But there was room to take "meaningful steps" towards a number of them unless the Government had a "vast splurge" in next year's budget.

Before the next election, he would outline in detail National's plan to ease the tax burden, improve work incentives "and enable people to get ahead in this country".

"Our focus will be on what can be achieved over a number of years, not just in year one.

"The Labour Government has had more than five years to provide some tax relief but has done nothing.

"Over a similar period, a National Government could radically transform the incentives New Zealanders face and the opportunities they have to get ahead in life," Dr Brash said.

- NZPA