Labour to axe secondary tax

ANDREA VANCE
Last updated 14:07 23/08/2014

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Labour has announced plans to scrap secondary tax for workers with more than one job - but National says it's already implementing the policy.

In the current system, those with more than one job often pay a higher rate on their secondary income.  It is expected they claim a refund on the wash-up at the end of the financial year.

However, Labour says this is too complex, overpayments are often not claimed back and the system hits hardest those in casual work.

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Within five years of taking office Labour would develop an alternative to secondary tax. In the interim, it would implement special tax codes until an Inland Revenue computer upgrade comes online.

"Many low paid workers are having to work two or three jobs to make ends meet and support their families," leader David Cunliffe said this morning.

"The current secondary tax regime makes life even more difficult for them and is an additional obstacle to meeting the basic costs of living.

"Labour will address this hardship by making sure that these workers ...have access to the money they earn when they need it - in their wage packets."

The policy would not reduce the final tax that any taxpayer owes but Labour says it would make the system "fairer and more transparent."

They also argue there is no cost in replacing secondary tax, and any extra cash IRD holds as a result of taxpayers not claiming refunds is offset by a corresponding liability on its books.

However, National's revenue spokesman Todd McClay said they were already going ahead with the policy.

He said IRD's Business Transformation plan will "address the PAYE system, including secondary tax and end-of-year square-ups."

Cunliffe launched the policy on a visit to Otara and Mangere markets this morning. He also took his election campaign there last week as Labour and National battle for crucial south Auckland votes.

Once considered Labour's heartland, National has chosen Manakau as the venue for their campaign and flagship policy tomorrow and are making a strong pitch for Pasifika support.

Meanwhile, on TV3's The Nation this morning, Labour's Grant Robertson did not rule out lifting the top tax rate as part of post-election coalition negotiations with the Greens.

The Greens have pledged 40 cents, Labour 36. 

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