United Future

Posted at 2007-09-12 15:32:14.397. Permalink.

Tax thresholds must be inflation adjusted annually. Failure to do this means that I have progressively less choice and less possibility of choice in how I spend my income. Government has no right to surreptitiously take more of my income without my say so at the ballot box. Adjustments of Tax Rates may be made from time to time when the case has been put forward and debated and, preferably, voted upon by us all.

Posted at 2007-09-13 20:56:09.312. Permalink.

1. They are depending to an extent on how broad the thresholds are, at what point they cut in and just what the differences in the rates are for each threshold. I agree with John that thresholds should be adjusted for inflation regularly. Going from only 5% in the top threshold to 10.6% (See here)(and not coz of large pay rises in relation to the rate of inflation) is just unfair.

2. I feel that if GST were to go up, thus penalising low income earners then some form of tax free threshold needs to be introduced at the bottom of the heap. Say the first $5000 tax free.

3. Three levels. A tax free level, The top 5% and everyone else in the middle. (and I am in two minds about the top 5%...)

4. The million dollar question. The usual answer is to cut the bureaucracy of the individual departments. Middle management are always easy targets. Just how many are there though?

5. 30% is pretty low for a top threshold but quite high if it is the only threshold. I personally would do quite well out of that but wonder where the money would come from for health, education etc if not from a big hike in GST or a large decrease in govt spending. I think if you are going for a flat tax structure then a tax free threshold is a must.

Posted at 2007-09-14 07:10:17.181. Permalink.

It is a moot point as to whether high levels of taxation or distortions arising from different tax thresholds have a greater negative impact on the economy. Both problems probably feed on each other. The best approach is to simultaneously lower overall tax rates and make the tax system as flat as possible.

New Zealand cannot buck the global trend to flatter taxes if it wants to build the talented workforce needed to develop a value-added economy. A lot of people don't realize that a flat tax combined with an income threshold is itself very progressive. It is also simpler and would produce fewer distortions than the present tax regime.

The alignment of the top personal tax rate, the company tax rate, and the rate for trusts at 30-cents in the dollar is long overdue. Many of our political decision-makers have not adjusted their thinking to modern realities. In an era of globalisation, a small, open, trade-dependent economy will not be able to maintain, the living standards of most of its citizens if it persists with high, distortionary tax rates. We need political leaders who understand the relationship between taxes and incentives.

Posted at 2007-09-17 22:43:46.39. Permalink.

I personally beleive that PAYE should be scrapped completely.when you register a car that is tax.you buy goods and services,the weekly shop included($21 on a $175 shopping bill),that is taxed,there is a tax on petrol.if both parents need to work because they are true low to middle income earners,there are child car costs involved.The rebate threshold is too low for personal tax summaries.GST could be set at a higher rate (15%)to be reviewed every 10 years.as a person who has experienced both unemployment/full employment,i know that what is left in my hand after tax does not go as far as it did even up to five years ago.If there is a concern that extra money in peoples hands could cause further inflation through personal spending,this could be offset by making kiwi saver compulsory at 5%.if threshlds are the way to go then they should start at 10% up to 36000 pa then 15 up to 50000 then 20 up to 65000 etc.

Posted at 2007-09-19 15:27:28.018. Permalink.

I see John Key was asking about tax cuts and cuts in public services today in parliament.

Hon BILL ENGLISH to the Minister of Finance: Is it still his position that tax cuts would require �severe cuts on expenditure on public services and infrastructure�; if not, why not?

Tax cuts don't necessarily mean cuts in public services!! The UK Labour Party have completely undermined the Tories by saying that they do in past elections. Labour held onto power in New Zealand at the last election in my opinion as a direct reult of this argument.

Posted at 2007-09-19 15:34:09.328. Permalink.

sorry, obviously I meant Bill English, not John Key - are they not one and the same you may ask? :)

Posted at 2007-09-22 11:43:30.065. Permalink.

UF is well placed to bring about meaningful tax reform: Peter Dunne is the Revenue Minister; the caucus has pushed through a substantial business tax package; and the party is promoting sound policies such as income splitting and a 30-30-30 tax regime. However, success depends on the public being properly informed about the issues involved.

First, it is not necessary to cut health and education expenditure in order to finance tax cuts. Well designed tax cuts, especially as they affect business and investment decisions, increase the capacity of the economy to provide tax revenue by reducing the cost structure of the economy and improving productivity. Also, it is possible to finance a proportion of any tax cut through reductions in poor quality government spending.

Second, some of our political leaders appear deliberately to mislead the public. For example, the use of accounting identities such as OBERAC and the Government's overall cash balance are not good indicators of the affordability of tax cuts. UF would be doing this country a great service by improving the standard of debate so that it is based more on empirical facts than on prejudices or vague notions of fairness.

Third, many salary and wage earners are also welfare beneficiaries. They pay PAYE, GST, excise and other taxes, but also receive government assistance because they don't earn enough to support themselves or their families. It should be possible to simplify and improve the efficiency of the tax and welfare systems so that tax cuts accompanied by commensurate reductions in government assistance can reduce the overall level of taxation and government spending without leaving anyone worse off.

Finally, many people who remember Labour's restructuring of the 1980s and National's benefit cuts of the early 1990s are suspicious of further reforms. UF must earn their trust by demonstrating that it is as concerned about the need for reform as it is about the way reforms are implemented. People plan their lives according to the parameters set by the policies of past and present governments and so can be hurt by sudden, far-reaching reforms. Reforms should be implemented with this in mind.

Posted at 2007-10-04 22:46:55.919. Permalink.

I agree with Robin - the debate has to be about the facts. Too often the public are misled (partly due to ignorance and bad media) to believe what ever the particular news outlet feels is true. I guess the question is - how do you get the message out without sounding bias or boring !

I'm no expert in taxes or finance but its certainly an issue that most people have an opinion on, me included !

1. Are tax rates more important than tax thresholds?
I moved from one tax threshold to another earlier this year, and I can tell you seeing my next pay day was disappointing! But I understand and believe that the more well off citizens should pay something to help out those who are not so well off. Do we need another tier for the very wealthy ? Or does that just punish success ?

2. Should GST go up to pay for big personal tax cuts?
I've heard some interesting theories that GST could be used to completely replace personal/income tax by raising it to 30-40%. Theory is that the market would adjust to us all having more money but having to pay more for goods/services. Not sure how it would play out in reality....?

3. How progressive should the tax system be?
I think three tiers is enough but maybe a forth tier for the lowest incomes ?

4. Should government spending be cut to pay for tax cuts, if so, where?
I�m not a big fan of the idea that the government cut spending to give me some of my money back. A few cents from me (and everyone else) adds up to real money which can be used to make a real difference to a lot of people � if used correctly. I�m a believer that smarter spending is more important than less spending.

5. What do you think of UnitedFuture's plans to align the top personal tax rate, the company tax rate, and the rate for trusts at 30 cents in the dollar?
If it can be done without limiting the governments ability to support the citizens and it doesn�t hurt the country � then it makes sense to me.

Posted at 2007-10-23 21:25:16.6. Permalink.

The more I hear Cullen, English and Key arguing over this subject the angrier I become. National cut taxes once when in office - when in coalition with United in 1996 - and then reneged the following year because of its deal with New Zealand First. It has opposed every tax cutting intiative we have taken since 2005, including the UnitedFuture led business tax cuts this year. Labour opposed the 1996 personal tax cuts, increased taxes further in 1999, and only agreeed to the business tax cuts, and the charities tax breaks, and the prospect of tax cuts next year because of UnitedFuture pressure. They are both as bad as each other on this issue and cannot be trusted to deliver. The blunt truth is both need our pressure before any change will occur.

Posted at 2007-11-05 16:03:16.574. Permalink.

It's funny how things go round, isn't it? After years of denying the need for tax cuts, Labour's now all for them. It's not fair, claims National, you've stolen our ground. While the children fight for their part of the sandpit, just remember the only party that has consistently fought for tax cuts - and delivered them when it has the chance. It's not Labour and it's not National. It's UnitedFuture. Funny that.

Posted at 2007-11-20 10:35:21.82. Permalink.

Is United Future still pushing for income splitting for couples who live together permanently? This is a key issue for me and one which will push me and quite a few of my collegues to support.

Currently governement policy iro working for families does not value the unpaid work one partner does in staying at home and bringing up a family.

This voluteer work is good for New Zealand, creates well rounded adolecents and I am sure also reduces the amount of crime and suicide amongst young people

I cannot believe that UF has not pushed hard on this before

Posted at 2007-11-20 11:27:53.248. Permalink.

The short answer is yes. As part of our confidence and supply agreement a government discussion paper on income splitting and how an income splitting system might work in New Zealand is being prepared and will be released by me as Minister of Revenue in April next year. The timing is quite deliberate - to ensure that the issue is a live one leading into the election campaign, which will require other parties to take a stand on it. The proposal is being developed on the basis of applying to couples with dependent children up to the age of 18 years. In 2005, Treasury estimated the cost of this as approximately $550 million a year.

Posted at 2007-11-22 10:02:31.43. Permalink.

Youve got MY VOTE!!!!