'Bracket racket' has cost taxpayers $10b - ACT
Kiwis on the average wage need a weekly tax cut of $35 just to break even, the ACT Party said today when it launched an assault on the Government's revenue record.
The figure is a calculation of how much money the Government has "stolen" over its time in office by failing to adjust tax thresholds in line with inflation.
Party leader Rodney Hide and election candidate Sir Roger Douglas called a press conference today to release their calculations.
They've worked out that "the giant tax bracket racket" has collected $10 billion for the Government's coffers.
"A Kiwi on the average wage has been robbed of $4232 over eight years," Mr Hide said.
"Since 2000 the average gross wage has increased 36 per cent. But the total tax paid on that wage has increased 56 per cent."
Sir Roger said an example of fiscal drag, or bracket creep, was the top tax rate of 39 cents imposed on income over $60,000.
When it was introduced in 1999 it captured about 5 per cent of income earners, but now between 14 per cent and 15 per cent were paying it.
If the threshold was adjusted, it should cut in at $74,000.
Sir Roger said the $10 billion had been wasted.
"They might as well have flushed it down the toilet."
Sir Roger said ACT would immediately make the first $10,000 of income tax free, which would give an average wage earner an immediate tax saving of $50.
Then it would abolish the 39c "envy rate" and make the whole system as low and flat as possible.
ACT will release details of its tax and other policies on Sunday.