United Future promises immediate tax relief

Peter Dunne

United Future is promising tax relief worth $2.65 billion a year and would sell up to 40 per cent of certain state-owned assets, including New Zealand Post and some power companies, to offset the cost. It would also halt parts of the Government's Working for Families package that has yet to get under way.

United Future's tax policy, announced at its election-year conference in Auckland, seeks to benefit all income earners.

Leader Peter Dunne said New Zealand had been through its longest sustained period of prosperity and there had been a shift in attitude over the past few months.

"People are saying, 'Where is my dividend?' It's the 'what-about-me syndrome'."

The difficulty United Future had with Labour was that its attitude to tax was that the more people earned, the more they should be penalised.

United Future wants the first $3000 of all personal income earned to be tax free. It would lower business tax from 33c to 30c and remove GST on local body rates.

It continues to promote income-splitting as a way to reduce the taxes of a couple where one wants to stay home and raise children (the one income, say $70,000, is nominally split into two incomes of $35,000 for tax purposes, meaning it is liable to less overall tax).

But the party's top tax priority is a five per cent increase of the thresholds to take effect on April 1 next year, instead of three years away as Labour has promised.

Labour's tax reductions that flow from adjusting the thresholds were 67c, $6 and $10 a week respectively for those in the low, middle and upper tax brackets.

United Future's policy would see the threshold adjusted by $5000 so that the 33c rate would apply on income over $43,000 (it's $38,000 at present) and the 39c rate on income over $65,000 ($60,000 at present).

The resulting tax cuts would range between $11.25 and $30 a week.

Finance spokesman Gordon Copeland said the state-owned enterprises that could be partially sold included New Zealand Post, Air New Zealand (the Government owns 82 per cent), Landcorp, and power generators Genesis, Mighty River Power and Meridian.

Transpower, which runs the national grid, would not be sold. Proceeds from the sales would be used to reduce the annual debt bill to the tune of about $800 million.

Mr Dunne said his party would be "unshakeable" in its insistence that no more than 40 per cent of a state-owned company would be sold.

"We would enshrine that."

He said each of the party's policies could be negotiated as separate components. It was not an "all or nothing" package.

Mr Dunne believed that Labour had an inherent failure to accept that if people earned more they should benefit more.

"It's almost the old socialism, that the more you earn, the more you should be penalised."

That was Labour's philosophical difficulty that underpinned their opposition to not just income-splitting, but cutting tax rates.

While United Future supports the Labour-Progressive Government on confidence and supply, he was not able to say whether the policy would be easier to negotiate with Labour or National, given that National had yet to announce its tax policy.

The other area in which Mr Dunne proposed that savings could be made for tax cuts was in greater public-private partnerships in areas such as health.

United Future also promised free health checks for the over 65s and a tax rebate for the over 65s who paid private insurance.

Tax cuts

On $43,000 earnings - $35 a week.
On $55,000 earnings - $66 a week.
On $65,000 earnings - $100 a week.

United Future's five core messages

We are the family party.
We are sensible, stable and reliable.
We want commonsense conservation.
We make MMP work.
We are the only option for National or Labour.