- By Christopher Luxon, Leader of the Opposition and MP for Botany
Last week I delivered my first State of the Nation speech in Botany.
One of the topics I spoke about was the looming cost of living crisis and how National’s income tax inflation reset would help alleviate pressure.
Since Labour came into office, food prices are up more than 13 per cent, the average rent is up $140 a week and it costs $45 more at the petrol pump to fill a standard tank.
And if you want to buy your first home, forget about it. The average house price is up almost $400,000 under Labour.
Rising interest rates mean interest costs on a $600,000 mortgage are up $7200 in the last 12 months and they’re only going up from here.
And Labour is using high inflation as a tax grab by stealth.
With prices rising twice as fast as wages, the average Kiwi family is worse off than they were 12 months ago – but high inflation means income tax is higher.
We’ve got the perverse situation where someone on the average wage now has a marginal tax rate of 33 per cent.
And someone on the minimum wage only has to work a 44-hour week to face a marginal tax rate of 30 cents on the dollar.
At the upcoming Budget in May, the Finance Minister should use a portion of his record $6 billion to adjust income tax thresholds to account for the inflation we’ve seen under Labour.
Someone on $55,000 a year would get $800 in tax relief this year. And anyone earning $88,100 or above would be better off by more than $1000 a year.
Because NZ Super is indexed to the average after-tax wage, superannuitants would also benefit. The couple rate for NZ Super would increase by around $520 a year.
These changes aren’t going to make anyone rich. But for Kiwis who are suffering under the weight of the cost of living crisis, every dollar counts so they would come as welcome relief.
They wouldn’t require cuts to existing services like health, education or the police. They wouldn’t mean austerity or a Budget with no new spending.
They would be met from the Finance Minister’s record $6 billion new spending allowance – and he would still have three quarters of that allowance left to fund new initiatives or pay down debt, which would still be a record amount of new spending.
In fact, the remaining $4.3 billion would still be the biggest every new budget spending allowance.
Labour believes they can spend your money better than you can. National believes Kiwis deserve some relief from the current cost of living crisis.
