Labour dumps tax cuts

The Herald reports:

Labour has officially dropped its policies of having the first $5000 of earnings tax free and of removing GST from fresh fruit and vegetables Leader David Cunliffe said this morning.

The policies were adopted in the run up to the 2011 election under then-Leader Phil Goff but Mr Cunliffe’s immediate predecessor David Shearer in his first major speech as leader almost two years ago indicated that the policies would be dumped.

Labour estimated the policies would cost the Government about $1.5 billion a year in lost revenue.

The GST off fresh fruit and vegetables policy was a piece of populist nonsense and it is good to see it gone. It would have complicated a tax that is praised globally for its simplicity, and achieved little.

The $5,000 tax free earnings policy had some merit – it would have delivered tax reductions to every taxpayer. There is a case to be made that no one should pay tax until they are earning enough to live on, as otherwise you just give it back to them in welfare and have wasteful churn.

“While these were worthwhile policies , we believe there are better ways to help struggling Kiwi families”, Mr Cunliffe said.

Will this be a different form of tax cuts, or just spending increases? I hope Labour go into 2014 offering tax cuts. They offered $1.5 billion of tax cuts in 2011. They may not have been well targeted particularly, but they were tax cuts. Will they offer anything to taxpayers in 2014? Or just tax increases?