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Cullen vows Budget for everyone

The Dominion Post
Last updated 23:39 07/05/2008

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Finance Minister Michael Cullen has promised all taxpayers will benefit from his Budget, but has ruled out lowering gst or a tax-free income band.

Tax cuts "cannot be huge", he said, and he ruled out a "big bang Budget".

The May 22 Budget would include a three-year programme of tax cuts that would be fair and responsible. He hinted they would be pitched toward the lower paid.

"The Labour-led Government recognises the need for relief across the economy, but we know that need is especially acute at the bottom end of the income scale."

He had considered a tax-free band. "This would have seen, for example, the first $9500 of income not attract income tax." However, at a cost of $3.7 billion after three years it would limit options further up the income scale.

Officials advised that the lower paid would not benefit as much as expected. Up to 90 per cent of those earning less than $18,000 a year were temporarily on low incomes, such as teenagers and students, or were on a benefit system or receiving Working for Families or superannuation. It would be better to give pensioners more through other tax changes, he said.

Households were under serious pressure, with rising mortgages, fuel and food costs. Farmers were being hit by drought and businesses were looking at world events "with reasoned pessimism".

He pledged to show responsible economic management "even as some political commentators ramp up expectations for a tax-cutting free-for-all and some media organisations appear willing to out-spin the spin doctors with hype".

Tax cuts would be fair and would not make inflation worse.

"The truth is that tax cuts cannot be huge. The Budget will make it clear that we are forecasting lower growth and tax revenue over the forecast period."

Removing gst on food and petrol would not be considered.

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36 comments
Nathan   #36   05:26 pm Jan 28 2009

This government hasn't got it right for everyone. The next government won't get it right for everyone either. If we all want generous tax cuts, best we all work out what we want to sacrifice for them, because it comes at a cost, particularly with a slowing economy. Not to mention a rather low productivity rate which means our wages ain't going to increase too much anytime soon.

Stephen   #35   05:26 pm Jan 28 2009

I'm a Kiwi living and working in South Korea. I pay 3% income tax, 10% sales tax in licensed stores (not in street markets) and some petrol tax. That's all. Crime is much lower here, longevity the same and there NO obesity, drug problems are virtually nil, gangs don't exist. Korea has gone from a war~torn pile of rubble to being the world's 11th economy in 50 years flat. It makes high value products with stunning innovation, brilliant technology and amazing diligence. It's time for Kiwis to grow up and stop being tax-bled by the government on the one hand and on the other hand depending on the government for handouts. I'd love to see an end to the countless overfed, lazy lard-buckets I see in NZ who bleat on for more government assistance instead of working harder and smarter to shrink both their bloated overly large government and waste-lines. Cullen is an idiot for creating and encouraging that kind of culture. Roll on budget day! I voted labour in the past. Not this time. I've seen an alternative that works and there's no going back.

Tony   #34   05:26 pm Jan 28 2009

His primary task is to collect as much money from us as he can. Then he can give it away in the way he wants, in the way Labour can become more popular. Everything he does, including this tax cut is primarily focused on his party popularity. It is not about us, it is not about New Zealand economy. I hate having to hand in my hard earned money to Labour so they can use it to buy votes. I can't wait for the election. If National doesn't win, I am off to Australia.

jtp   #33   05:26 pm Jan 28 2009

In Australia the first $6000 (or$99 p/wk) is tax free, the EMPLOYER pays 9% of income towards super, there is no GST on fresh foods (ie-not value added items) and the tax rates in general are lower and wages are higher AND they throw in things like the first home owners grant!..not out of our retirement savings! I don't want to draw too stronger a comparison but we are similar countries in everything but size are we not? But the proof is there..it works! If people have money they spend money! It's really time that NZ gets out of this rut and starts being competitive internationally if we want to keep our work force here.

Tanya   #32   05:26 pm Jan 28 2009

Yeah guys, because tax cuts are going to fix all our problems - the government has a lot more to address before they get to tax cuts and quite frankly I am willing to give up my few cents extra a week if it means I still get subsidised healthcare. And no, National will not magically make things better - if anything they are even less concerned about the average New Zealander, they're more interested in businesses. When they had power during the 90s they lowered the minimum wage - would you all still be singing their praises if they did that again? This whole tax cut business is just a quick fix - it's not addressing the underlying problems.

Geoffrey   #31   05:26 pm Jan 28 2009

I bet that guy Cullen is so mean he buys only one tomato at a time when he makes his annual visit to a supermarket.

And I further bet he goes home and complains to Mum about the price of groceries!

Jeffrey   #30   05:26 pm Jan 28 2009

I am hoping Cullen follows Australian tax rates with no tax on the first $6K and a top tax rate of 45c per $1.

Michele   #29   05:26 pm Jan 28 2009

Cullen is a popularist cynical politian of the worst kind. He is attempting to deliver policies that are most likely to get him re elected, rather than policies to benefit NZ and NZers. Giving students debt free loans, and soon after, Starship doesn't have the money to keep running... working for families recycling OUR money to those of his constituency, turning 70K plus earners into beneficiaries rather than attempting to fix an economy that means good earners actually NEED benefits...

Having said all that a tax free band is a bad idea. I am comfortable on my current salary, and don't go without. There is no need to give me my first 9k tax free. Best to take a closer look at how to restructure the tax system so we don't need WFFamilies and kiwisaver etc.

Graeme Allison   #28   05:26 pm Jan 28 2009

One can certainly understand why a growing number of Families and young skilled people are making there way to Australia given the approach of Labour Party to tax cuts. Perhaps if Cullen and his friends had managed the $'s better we too would by now have been in the same situation as Australia in having the first $16,000 of Income Tax free. Again we see that this government is all about controlling the people, that they know better than us how to handle the purse strings. (Yea Right!) As they continue down the path of mismanaging the NZ Economy and making more of us dependant on the state for our source of income. Lacking in Leadership and unaware of the damages they are doing to the Business Community I wouldn't be surprised that the only jobs existing in New Zealand will shortly be with a government SOE's. The sooner they are thrown out of power the better

Bruce Knapp   #27   05:26 pm Jan 28 2009

The time has come for ACCOUNTABILITY in this country.This Government is holding on to OUR taxes and distributing them unwisely or not at all where they are needed.THE PEOPLE are where the money is needed. Lower the interest rates and stop the rising prices any way you can .New Zealand needs direction and accountability not a lot of pampered politicians arguing like schoolchildren over issues that do not affect the "person in the street".Lets make NZ a place to be proud of with people that enjoy a reasonable lifestyle not the imbalanced structure we currently live in.No wonder we are leaving our shores in droves. WAKE UP LABOUR OR LOOK TO BE IN OPPOSITION THIS ELECTION.


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