Editorials on Tax Package

The ODT says:

Sensibly, the plan does only minimally reward those already receiving some form of government assistance, particularly Working for Families, who are earning $50,000 or less a year – average wage-earners, for example, will get $36 a week, $4 a week more than from Labour.

National will restore a tax rebate to middle-income earners who are single or who do not have children and who were not included in the Working for Families scheme, which is likely to be a popular, if entirely unjustified, measure. …

A National government would operate a 2 plus 2 scheme, subsidising an equivalent amount of 2% of employees’ contributions, but the subsidy would not rise to 4%.

That decision will be widely criticised as being a disincentive, but the grounds for a government to subsidise personal savings, especially in a scheme which has proved so popular, are weak indeed….

Voters should consider, however, why after 10 years of favourable global economic conditions the country now faces “an ocean of red ink 10 years into the future”, as Mr Key says.

The answer is, of course, twofold but interlinked: the Clark Government decided to spend very large sums on subsidising wages and savings, increasing the bureaucracy and “future-proofing” superannuation, at the same time as a great many wage and salary earners went on a debt-fuelled spending spree.

A pretty balanced editorial.

The Dom Post says:

The  modesty of National’s tax cut plan is smart politics by Mr Key. It is pragmatic and an astute reading of where the election will now be fought, The Dominion Post writes.

As the leaders of the world’s big economies wrestle with how to fend off catastrophe, and as New Zealanders come to terms with the grim news contained in the pre-election economic and fiscal update, the focus has shifted from tax cuts to economic management. That makes its lack of extravagance – it does leave some New Zealanders worse off, rather than borrowing to deliver to all – a virtue rather than a vice. Lavish promises now would be seen as either pre-election rhetoric to be abandoned soon after November 8, or as foolhardy in the extreme.

But will this stop Labour making them?

The package still underlines the fundamental difference in approach between Labour and National when it comes to tax. Mr Key’s philosophy is summed up in his desire to reduce the top tax rate to 33c in the dollar over time. His regret is that circumstances mean he could not now make bigger cuts.

Dr Cullen’s is that he had to make cuts at all.

That is brillant. Key regrets he could not cut tax more, while Cullen regrets he was forced to cut tax at all!!

It is impossible to avoid the conclusion that he offered the reductions in this year’s Budget grudgingly. He is, at heart, a man who regards higher earners as “rich pricks”, and believes those who have succeeded have somehow ripped off their fellow citizens. He and his Labour colleagues believe they know how to spend people’s money better than those who earn it. The “chewing gum” round of cuts promised before the last election and petulantly cancelled afterwards – partly because people had not been grateful enough – is evidence of that.

So true.

Mr Key’s package is modest, credible and affordable. Now it is up to voters to decide whether it is also desirable.

Indeed. And does Labour have an alternative? Are they going to put tax rates up? Are they going to cut spending anywhere?