Govt readies NZ for spending cuts

Posted By TEU on Dec 3, 2009 |


The government’s forthcoming Tax Working Group cannot help but appear moderate in contrast to” the widely derided Taskforce 2025, headed by ex-national party leader Don Brash, which released its recommendations earlier this week.

The TWG is set to release its recommendations by the end of this year, and is tipped by the business media to recommend cutting New Zealand’s top income tax rate from 38 percent to 30 percent, to align it with the company rate. The estimated NZ$1.6 billion ($1.1 billion) annual cost could be made up by increasing the sales tax, and imposing a land tax or levies on capital gains from investment property.

Finance Minister Bill English said he is” open-minded on what new taxes could be introduced.

“The only proposition that’s been ruled out is a capital gains tax on people’s individual home,” Mr English told reporters after his speech to the working group conference this week. “We’ve avoided ruling anything else out.”

In contrast to many of his comments throughout this year, the finance minister said that New Zealand was in comparatively good financial state and should be looking to ‘reinforce its status as a low-tax country’:

“While our public finances aren’t in great shape, they are not as bad as other countries, and there is an opportunity for us to enhance our relative position as a low-tax country.”

TEU president Dr Tom Ryan warned that low taxes would probably mean low investment in important public infrastructure like tertiary education.

“Achieving lower taxes may be an admirable aim, but not if it undermines important social and economic institutions like universities, polytechnics and wānanga.”  It’s almost inevitable that bodies like Taskforce 2025 and the Tax Working Group, which advocate lower taxes, also want to reduce government investment in education.”

“Whether a lower tax regime is designed by Don Brash or by Bill English, disinvestment in education can only result in our tertiary system falling further behind that of Australia, and never catching up with it,” said Dr Ryan.

Thanks to nznationalparty @ Flickr for the photo

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