National says its tax cuts are targeted to the median earner, though families with children and landlords also get special attention in the $14.6b package, Marc Daalder reports
The National Party has unveiled a massive package of tax cuts, new taxes and plans to scrap government programmes if elected on October 14.
The dollar value of the whole project is $14.6 billion and National's finance spokesperson Nicola Willis says it is revenue neutral, meaning it won't require any additional borrowing or Budget allowances.
The centrepiece of the spending is a $9 billion adjustment of the bottom three tax thresholds to account for recent inflation. By targeting just the three lowest ones, National has ensured anyone earning over $78,100 a year would receive the same benefits. That means someone on a six figure salary wouldn't get a greater cut than someone on $80,000.
"Our plan is carefully targeted to ensure that those who will benefit the most are working New Zealanders. It’s about time they got some relief from Labour’s cost-of-living crisis and National will deliver that to them," National leader Christopher Luxon said.
"It’s not right that someone on the minimum wage is so close to the 30 percent tax rate, that if they choose to work longer hours, those hours are currently taxed at 30 percent. National’s changes will mean a full-time worker on the minimum wage will only pay 17.5 percent tax on extra hours worked."
Changes to various tax credits, including the independent earner tax credit (for middle-income earners) and Working for Families (for households with children) make up much of the rest of the package.
National says a two-person household on the average household income of $120,000 would save $52 a week, while the same household with a kid in childcare would see $126 more a week. A full-time minimum wage worker would save just over $25 a week.
Three other spending changes were proposed: a phased return of interest deductibility for residential landlords, costing $2.1 billion over the next four years; lowering the brightline test timeline back to two years at a cost of $200 million; and reversing the Government's changes to GST treatment of rideshare providers and other digital services.
The full package would be funded through $8.5 billion in savings and reprioritisations and $6.3 billion in new taxes and fees.
On the savings front, National would ask agencies to cut another 6.5 percent from their back-office budgets, on top of the 1 to 2 percent cuts announced by the Government on Monday. While key agencies like the Ministry of Health, Te Whatu Ora, the Ministry of Education, police and the Defence Force would not exempted from this requirement, they would be asked to reinvest the money in frontline services rather than return it to the general coffers to pay for the tax cuts.
"These agencies will still be expected to reduce wasteful bureaucracy spending, but any savings will be recycled into the frontline. All other agencies will be required to find savings and reduce spending," Willis said.
National would also seek a further $400 million a year reduction in contractors and consultants procured by the public sector and expects to save $2.1 billion over four years through scrapping a range of government programmes, like public transport subsidies for young people, Resource Management Act reforms and fair pay agreements.
Finally, it would redirect all future Emissions Trading Scheme revenues to the tax cuts. That money is currently earmarked for fighting climate change, but National says it would fund climate policy out of general Budget allowances going forward.
The four new taxes include a change to allow foreigners to buy houses in New Zealand worth more than $2 million for a 15 percent tax, reversing changes to commercial building depreciation, charging overseas gambling operators tax on proceeds from Kiwis' online gambling and raising immigration levies. Immigration levies would be capped at 10 percent below Australian levy levels and visitor and tourist fees wouldn't change at all, the party says.
