The Government should give struggling Kiwis a break this Budget and deliver tax relief from the cost of living crisis, says Opposition Leader Christopher Luxon.
“Inflation is at a 30-year high, with the cost of everyday basics like food, petrol and housing all through the roof. The average Kiwi family is worse off than they were 12 months ago and the Government needs to act,” Luxon said in his State of the Nation speech on Sunday.
“One of the hidden costs of inflation is bracket creep where earners are paying more tax solely because of inflation. Someone on the average wage now has a marginal tax rate of 33 per cent. That’s not right.
“At the upcoming Budget the Finance Minister should adjust the bottom three income tax thresholds to account for the inflation we’ve seen in the last four years under Labour.”
Luxon said a family with two adults on the average wage would benefit by over $1700 a year. Someone earning $55,000 a year would pay $800 less tax. Everyone earning over $78,100 would be better off by over $1000 a year. In addition, the couple rate for NZ Super would go up by $546 per year on top of the scheduled increase this April.
“Anyone earning over $14,000 or receiving NZ Super would be better off as a result of these changes,” Luxon said.
“No one will get rich, but they will make things a little easier for Kiwis struggling with the rapidly rising cost of living.”
He said these changes would not put further pressure on inflation or require spending cuts in areas like health and education.
“They would be met from Grant Robertson’s record $6 billion new spending allowance and so would simply require Labour to be slightly less profligate with its new spending in Budget 2022,” said Luxon, the MP for Botany.
“Even after accounting for the $1.7b cost of these tax cuts, the remaining $4.3b would still be the biggest allowance for new spending initiatives ever.
“It’s time for the Government to stop its massive tax grab. They need to take action and deliver tax relief to hard working Kiwis struggling under a cost of living crisis.”
However Minister of Finance Grant Robertson hit back saying Kiwis have heard “the same tired old story” from Luxon “that fails to give any new ideas for our future”.
“This speech is just a continuation of the mistakes made by the succession of National leaders since John Key,” said Robertson.
“The maths just does not add up. Christopher Luxon wants to cut taxes, reduce debt, and keep on spending. This is the same fiscal ‘Bermuda triangle’ that got Paul Goldsmith in trouble, and nothing seems to have changed for National.
“Let’s be clear, what National outlined today will mean cuts to important services. They need to front up to Kiwis and say which health, education and housing services they will slash to make that happen.
“The reality is that Christopher Luxon’s proposals will just make things worse. There will be more congestion on Auckland’s roads, it will be harder for first home buyers to buy a house and those on low incomes will fall further behind.
“National is still missing in action on a plan for the major issues that will define New Zealand’s future. The speech said nothing about how we will meet the challenge of climate change or seize the economic opportunities that come from a low carbon economy to provide higher wage jobs.
“What is more, Christopher Luxon had nothing to say about Covid at a time when New Zealanders are dealing with the most significant outbreak we have seen in the pandemic.
“The speech shows once again that National will not face up to the hard decisions that come with being in government. Just as the previous National government failed to address housing or mental health, this time around they are not prepared to back the work Labour is doing on the much-needed reset of our health system or to ensure New Zealanders have safe drinking water and decent waste and storm water systems.”
