Thursday, May 8, 2008

ZenTiger Tax free band out of tune with Labour

Dr Cullen today ruled out a tax free band at the bottom end of the scale when considering tax relief in the upcoming May budget. What would have been music to the ears of many cash strapped workers is simply a discordant note to Labour, who march to a beat of a different drum.

Which is almost strange, because creating a tax free threshold would arguably be a very "Old Labour" policy in terms of a fairer and simpler way of easing the tax burden on low incomes. But "New Labour" is to keep tax rates high and then redistribute it as welfare, all the while pointing out what a huge favour they are granting the lucky group singled out for tax relief.

"The Labour-led Government recognizes the need for relief across the economy, but we know that need is especially acute at the bottom end of the income scale."

Nice words. They mean little.

He had considered a tax-free band. "This would have seen, for example, the first $9500 of income not attract income tax." However, at a cost of $3.7 billion after three years it would limit options further up the income scale.

What? Labour is worried there wont be enough up the scale to provide tax relief for the dirty rich pr*cks? Pull the other one.

Officials advised that the lower paid would not benefit as much as expected. Up to 90 per cent of those earning less than $18,000 a year were temporarily on low incomes, such as teenagers and students

and they don't need help?? No, what they actually just said was these are not groups that they feel worth helping this election. They've raised the minimum wage and reduced student loans. That's it. Ungrateful snots, no doubt.

or were on a benefit system or receiving Working for Families or superannuation. and Labour don't like the idea of unwinding welfare benefits as they ease the tax pressure.

It would be better to give pensioners more through other tax changes It would be better to create more red tape and complications and package it up as an election promise to the target groups, such as NZ First voters (aka Pensioners).

A tax free band would actually be a nice way (in the centre-left style of thinking) of easing pressure on all income earners, provide an opportunity to reduce the number of people on welfare (I include WFF thresholds in this) which only complicates our lives and requires more people to report to the government for their rebate.

With the May 22nd budget only 2 weeks away, we don't have long to see what Cullen has in mind to help win the next election, to help struggling workers, but it's already looking that National can make a song and a dance about this, and for the swing voter types that often determine the fate of NZ Politics, a tax free band could have them singing from the National hymn book.

Related Link: Cullen vows chewing gum for everyone

3 comment(s):

Psycho Milt said...

I can't figure out what's behind Cullen rejecting this idea. This is exactly the kind of tax cut I could understand - would benefit me some, but benefit people on low incomes a lot more in relative terms. Why would we need to care about options further up the income scale? Those of us on good incomes also earned a first $9500, so we'd still benefit from it.

ZenTiger said...

Agreed PM. I don't like the entire tax system (but that's a different post), but to me a tax free threshold would be a good Labour policy.

Cullen has this priced at 3.7 billion, but that could easily be lowered by adjusting the various benefits down a smidgen (but not so much as to negate the tax break) and introduce capital gain tax on the poor sods who have investment properties. The only silver lining would be if they were forced to sell them in this market, they probably will make very little in the way of a capital gain :-\.

We'll have to see what he has up his sleeve. Perhaps increasing the top tax rate to 47% on very high incomes (like Australia) and introducing some new industry based taxes??

MathewK said...

I personally don't like things like tax-free thresholds because it's not fair to those who earn more an the thresholds. If you make it 9K, then he who makes 10K will be worse off and that serves as an incentive for him to earn less not more.

Flat tax is what i prefer, same percentage across the board because why should someone who earns a lot of money because they're busting their asses pay extra. It implies those who work hard are less deserving of their income and the useless sack of filth is more deserving because he/she is too lazy to get off their asses and work.

We in Australia waffle on about fair-go and all that but it's bull when it comes to taxes. I've seen what Americans pay in tax, and they under leftie slimeballs are much better off than us. We can only dream of keeping a equivalent of what they get to keep.

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