What progress will he announce in the Budget tomorrow on the Government’s medium-term goal of a “broad-based, low-rate tax system”, as agreed to in the National-ACT confidence and supply agreement?
The Government continues to support the principle of a broad based - low rate tax system. Decisions that were taken earlier with regard to KiwiSaver and research and development tax credits are consistent with this approach. The Government has ensured that there is no further erosion of tax bases. By international standards New Zealand’s tax bases are already broad, and are relatively efficient at raising revenue. It would be fair to say that tax strategy is not at the centre of the Budget.
Why is the Minister apparently willing to renege on his lower tax policy promises but not on his high Government spending promises?
It is our view that the decisions in the Budget will reflect a fair balance between on the one hand supporting New Zealanders through the most difficult time of a recession, and on the other preparing to grow the economy. I expect that some people on either side of the political spectrum will believe the decisions did not go exactly how they wanted them to go. That means the decisions will probably be about right.