3. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
What recent measures has the Government taken to put more money in New Zealanders’ pockets?
Hon BILL ENGLISH (Minister of Finance) Link to this
Tomorrow about 1.5 million New Zealanders will benefit from tax cuts. These cuts will deliver around $18.50 a week to someone on the average wage, and will inject over a billion dollars into the economy over the next year. Tax cuts provide the right incentives to encourage people to get ahead and to boost growth as we come out of the recession.
About 630,000 New Zealanders who earn between $24,000 and $48,000 a year will benefit from the new independent earner tax credit, which returns up to a $10 a week increase in their incomes. Low to middle income workers will also benefit from the lifting of the 33c tax threshold from $40,000 of annual income to $48,000.
Under the policy of the previous Government there would have been no tax cuts for anyone this year. It is confusing trying to track Labour’s position on tax cuts. It has called for cancellation of the 1 April tax cuts—a move that would strip at least a billion dollars out of taxpayers’ pockets over the next few years. At the same time it has also called for much greater fiscal stimulus.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. The member is an experienced member, and he knows full well that he does not have responsibility for Labour policy.
Mr SPEAKER
Hon Sir Roger Douglas Link to this
Can the Minister please explain to the House and the people of New Zealand how borrowing $1 billion from some New Zealanders to finance tax cuts worth $1 billion to other New Zealanders will create a net gain for the average New Zealander?
A feature of these tax cuts is that they are permanent. National is committed to lower taxes because we believe that the long-term effects of them are to increase the incentive for people to get ahead and to increase the rewards for hard work, investment, and risk taking. We do not believe that we should abandon those principles because we are currently in a recession.
Hon David Cunliffe Link to this
Does the Minister agree with the Prime Minister that these tax cuts are “fair for all New Zealanders” when 71 percent of New Zealand earners will receive nothing, and 30 percent of all of the tax benefit will go to only 3 percent of income earners?
Yes, I do agree with the Prime Minister. We believe that these tax cuts are fair and affordable. I do not agree with the member’s numbers.
On 1 April a number of measures will be introduced that will make it simpler and less expensive for small to medium sized enterprises to pay tax. These changes are worth around $480 million over 4 years. Among them are changes to the provisional tax system that will provide an immediate cash-flow boost to small to medium sized enterprises by leaving around quarter of a billion dollars in those businesses in May this year.
Hon Sir Roger Douglas Link to this
Can the Minister explain to the House how borrowing $1.4 billion—a figure that includes interest on previous borrowings to finance tax cuts in 5 years’ time—to finance tax cuts totalling $1 billion this year will create a net gain for the New Zealand economy?