National promises tax threshold changes in speech

Derek Cheng, NZ Herald,
Publish Date
Wednesday, 30 January 2019, 2:54PM

National leader Simon Bridges is pledging to move tax thresholds every three years in line with inflation, which would see someone on the average wage with an extra $430 a year in 2021.

And he is promising to release a bill to overhaul the Resource Management Act this year, and fight proposals - which the Government is considering - to reform the role of school boards.

In his State of the Nation speech in Christchurch today, Bridges said that a National-led Government would adjust tax thresholds within a year of every election.

The move would address bracket creep, when inflation pushes income into a higher tax threshold.

"By 2022, New Zealanders on the average wage are expected to move into the top tax bracket. That's not fair, and it's not right," Bridges said.

"In real terms people's pay is going down even when living costs are going up."

Tax thresholds have not moved since 2010 and are currently at 10.5 per cent for annual income up to $14,000, 14.5 per cent to $48,000, 30 per cent up to $70,000, and 33 per cent above $70,000.

Assuming inflation of 2 per cent, National said that someone earning the average wage of $52,000 would be $430 a year better off after the first adjustment, $900 after the second, and $1400 after the third.

If National won the 2020 election, the first adjustment would be in 2021.

Based on today's estimates, it would deprive the Government of $650 million a year in tax revenue, but Bridges said "we can afford that by managing the books prudently and spending wisely".

Bridges said the proposal would include a veto power for the Government of the day, but with a requirement to tell the public why.

"We won't allow future governments to use inflation as an annual tax increase by stealth."

Act leader David Seymour has highlighted bracket creep for years and previously described it as tax hikes by stealth.

Bridges also said National would not increase petrol taxes in its first term, and reiterated previous pledges of no new taxes in a first term in Government and to cancel new taxes from the current Government, such as the Auckland regional fuel tax and any capital gains tax that might be proposed.

Bridges criticised the Government for its KiwiBuild record, but admitted that National "didn't do enough" when it was in power.

He said National would release a bill to overhaul the Resource Management Act this year to free up land for housing.

Bridges also sought to paint Labour as soft on crime and National as tough on crime.

"We support increased investment in rehabilitation, but we also support tough penalties for dealers and necessary powers for police to combat drugs."

He said National would continue to be a "constructive Opposition", citing cross-party work on child poverty reduction legislation, a bill to promote teaching a second language in schools, and the work to establish a Climate Change Commission.

National's tax plan:

  • Raise tax thresholds in line with inflation within 12 months of the 2020 election
  • People earning the average wage ($52,000 a year) would save $430 a year after the first adjustment (assuming 2 per cent annual inflation)
  • This would see $650m a year less in tax collected by the Crown
  • About 84,000 people would be kept from moving into the 33 per cent tax 
    threshold,, and 95,000 people from moving into the 30 per cent tax threshold


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