Five questions for National after tax plan release
The National Party has unveiled a multibillion-dollar plan of tax cuts and payments to families , to be funded mostly by cuts to the public service, new taxes and cash from the Emissions Trading Scheme. Nationals political rivals say its plan relies on too many variables, and have questioned the partys proposal to divert climate change funding and hike up the cost to immigrate to Aotearoa. The plan would see $14.5 billion spent on a range of tax changes and payments , the biggest of which is a promise to inflation adjust income tax brackets. National estimated this would cost about $9 billion over four years. National Party finance spokesperson Nicola Willis said the plan would deliver cash injections to every worker, thanks to the promise to stop bracket creep through triennial adjustments to the income tax brackets. She also promised increases to Working For Families and the introduction of a Family Boost payment scheme, to give 25% rebates to parents who send their pre-schoolers to early childhood centres. The plan also included promises to reverse recent Labour Government changes: The return of interest deductibility, delivering $2.1 billion to landlords over the next four years, and getting rid of the bright line test change and digital services tax. Climate Minister James Shaw said National was taking money from climate change measures to fund a general tax cut. Willis said the plan would rely on about $600m annually to come from the Emissions Trading Scheme, a programme which charges polluters. Its been the common practice that money from the ETS is ring-fenced for climate change adaptation or mitigation projects, as part of the Climate Emergency Response Fund. Willis called the ETS payments a climate dividend. It pissed me off, Shaw said. It is not a climate dividend... It incenses me because it is completely irresponsible, and it co-opts the language of action on climate change, to fund their tax cuts. It is extremely misleading. A few days before National announced its plan to slash the public service, Prime Minister Chris Hipkins and Finance Minister Grant Robertson announced their own cuts . Robertson said it was feasible to cut about 1% or 2% from non-frontline departments, without impacting the quality of the public service. National wanted to take another $594m annually from the bureaucracy, on top of a $400m cut to government consultants. To give context to that number, $594m would pay for about 6500 full-time employees given the Public Service Commission estimated the average salary of a public servant to be $90,000 last year. While Willis said costs could be cut in other areas (not just staffing), that funding demand is enough to staff a ministry larger than the MBIE behemoth. National is relying on a new 15% foreign home buyers tax to generate more than $700m each year, to fund the rest of its tax plan. But this foreign home buyers tax is very specific. Since 2018, foreigners have been banned from buying New Zealand houses Willis proposed allowing foreigners to buy houses valued above $2m and then taxing the sales. Willis estimated fewer than 2000 sales would go through each year. And she highlighted trade agreements with Singapore and Australia, which would prohibit a tax for those residents. Labours housing spokesperson, Megan Woods, said National had overcooked its $700m estimate. Before our foreign buyer ban in 2018, an average of 4120 homes were sold every year to foreign buyers. Nationals plan assumes 48.5% of those homes would be sold for over $2m, despite homes of that value being only 5% of the market, she said. Data from CoreLogic showed about 50,000 New Zealand houses were valued at above $2m. Labour also suggested other tax treaties could prohibit a foreign home buyers tax. Given theyve exempted Australia and Singapore theyve already eliminated 27 per cent of the foreign buyers from 2018, said Labours David Parker. He said tax treaties with the UK, Hong Kong, Japan, and Canada would cause issues for Nationals tax. The National Party said tax treaty issues were surmountable, and would have minimal impact. Willis said the party sought legal advice on its foreign buyers tax, which suggested it was consistent with New Zealands existing free trade agreements. National proposed taking an extra $123m per year from user pays immigration levies effectively hiking the cost to apply for a visa. Immigration minister Andrew Little said there would be a number of side effects of this, including driving away skilled migrants in competitive fields. In health, for instance, Little whos the former health minister said Te Whatu Ora already paid for the visa applications for health workers moving here. What were going to see is a money-go-round, he said. National also proposed an offshore gambling tax, which it said could scoop up $179m each year. But Labour ministers said theyd already looked into taxing offshore gambling, and said Nationals proposal wouldnt get as much money as it thought. Racing Minister Kieran McAnulty said National would get a maximum of $40m or $50m. Internal Affairs Minister Barbara Edmonds said a lot of online gambling operated in a black market, which was tricky to tax. Willis said the gambling tax would work. She proposed geo blocking sites, effectively putting in Internet bans, for gambling websites which refused to play ball.