What will Labour do with the $1.5 billion?

Patrick Smellie at Stuff reports:

Just about anyone who pays income tax earns more than $5000 a year, so every single taxpayer would have benefited from the move, largely offsetting Labour’s intention to raise the top income tax rate from 33 cents in the dollar to 39 cents anyway.

That is a good thing, not a bad thing, that all taxpayers would get a reduction in their tax. Every taxypayer would get $525. However with the top rate going up 6%, those who earn more than $8,750 over the top rate threshold would have ended up paying more.

But I always like to look at tax cuts as a percentage of actual tax paid. The $5,000 tax free threshold would mean tax on $20,000 would reduce by 20.8%, tax on $50,000 by 6.5% and tax on $100,000 by 2.2%.

However, by giving itself a $1.5b kitty to play with, Labour has opened up a significant flank for election year attack by National. In effect, Labour is saying that rather than give you your tax money back by exempting fresh produce and the first $5000 of income, we’ll decide how to spend it for you.

Whatever it proposes had better look attractive to the swinging, middle-of-the-road voters that Labour needs to bring its way this year if it’s to have a hope of governing after the election.

I hope Labour does offer a different form of tax cuts. My worry is they will only offer tax increases, and pledge to take more money off families that are working and give it to families not working.