Labour promises tax cuts

It’s now official – Labour will deliver tax cuts in 2008.  Helen Clark made the pledge at the Labour Party conference today.

Now this is the same Government who not only refused to give tax cuts five months ago, they actually cancelled the tax cuts announced in 2005.  So their sudden belief in tax cuts has nothing to do with the polls they claim, but after eight years of opposing tax cuts, they have by coincidence changed their minds in just five months.  Suddenly they claim the surpluses are large enough to be structural.

Well this is of course crap.  Even a moronic year ten economics student could have concluded some years ago that there was big enough surpluses for tax cuts.  I mean, for God’s sake we have the second largest fiscal surplus in the world.

Let’s take a look at the fiscal surplus projected in the last four budgets. These figures are the average of the Operating Surplus Projections less NZ Super Fund surplus, for the four projected years in each budget.  So the figure for 2004 is the average of the projections for 04/05 to 07/08.

2004 $4.68 billion
2005 $4.55 billion
2006 $3.81 billion
2007 $3.86 billion

What this clearly shows is that the projected surpluses in the 2007 BEFU are significantly below what they were in 2004 and 2005, and around the same as 2006.   In other words tax cuts were more affordable in 2004 and 2005, than they are today.

So forget the nonsense that Treasury is to blame, and suddenly they have said tax cuts are now affordable.  Colin Espiner points out Treasury have been saying since at least 2005 that tax cuts are affordable.  Yes Treasury has been under estimating the surplus – but this has been known for some time.  In fact I have blogged about this for some years.

Anyway does Labour now promising tax cuts mean they can be called National-lite? 🙂