Axe the tax

Labour’s current campaign for “ordinary New Zealanders” is “Axe the Tax”.

Now 95% of New Zealanders will take this as meaning that Labour want to axe GST. After all it is not called “Stop the hike” but “Axe the tax”.

So Labour are trying to make people believe that they stand for axeing GST. Sure not in the small print, but if you see that big bus go by with “Axe the tax” on there, that is the impression you will get.

So how much would Labour have to put up personal tax rates, to compensate for an axed GST. Well GST brings is around $9.6 billion from the private sector.

Now assuming Labour would not want to increase the two lower tax rates or the company tax rate, it means that Labour would be able to align the 33% tax rates and the 39% tax rate. They would both have to increase to 86%, so that any money you earn over $48,000 you only keep one seventh of it.

Maybe Labour may want to reconsider having such a misleading campaign slogan?

UPDATE: Some sharp eyed readers have noted that the campaign, its bus, etc are all funded by the taxpayer from the Leader’s fund. Now it is a legitimate expense within the rules, but it would be ironic that if Labour do axe the tax, then the current level of taxpayer funding to parliamentary parties may have to be axed also 🙂