Tax Cuts

It is great to see Don Brash putting tax cuts back on the political agenda.

The surplus NZ currently has is not only the highest in our history but I suspect the highest in the developed world. The claims by Cullen and co that we can not afford tax cuts is ideology gone mad. Dr Cullen would always rather spend your money for you than give any of it back. This is why he won’t even commit to specifying a level at which he would agree to tax reduction.

Tax cuts are not some mad far right thing to do. If I recall correctly every OECD country in recent years has reduced taxes – we are the only one that does nothing but increase them. And many of these countries have centre left Governments.

Cullen insists a huge surplus is needed to keep gross debt from increasing. A 7th form accounting student should know better. The issue is simple. Increasing debt to fund an operating deficit is very very bad and unsustainable. Increasing debt to fund capital and infrastructure is not bad, and in fact is the sensible way to do it. The contributions to the superannuation fund are needed to be funded from the surplus, but National has said it will keep a surplus high enough to do that.

John Armstrong in the NZ Herald observes “voters [should ask] one crucial question: if tax cuts amount to loose fiscal policy, why doesn’t the same argument apply to Cullen’s spend-ups?”

There is also the start of a good debate about whether for example health insurance should be tax deductible. Most people with health insurance are paying three times over. As higher income tax payers they are paying taxes for their own public health care, which they rarely take up. They are also paying for all the public health care for all the NZers who are not net taxpayers (around half), plus they are paying for their own health insurance. Allowing them to at least get some tax relief for the fact that by having private insurance they reduce the cost of public health care works for me.