Small on ACT’s tax policy

Vernon Small writes:

Sound like a good idea? Tick.

It’s fair. Tick.

It’s a tax cut. Where do we sign?

It’s a politician’s dream policy? Ah, maybe not so much.

ACT and leader David Seymour have in recent weeks hung their political hats on promoting the thoroughly commendable policy of indexing tax thresholds to inflation. 

True, it’s not exactly a Roger Douglas-esque call to arms. “Trash that wussy progressively tax and bring in a flat rate across the board!”

But for a party that must choose carefully when to kick the Government in the slats – and for one that believes in less tax and a smaller state – it is a canny option.  

I agree. It benefits basically everyone who is in employment.

ACT is right on a couple of scores, though.

If it is to be done it’s better it is done now when inflation is low and the impact on the Government’s books is small, though not cost free. English has recently lamented how the low inflation rate, and therefore the lack of extra inflation-driven tax revenue, has made it harder to reach his surplus target  

And the nice thing about a law indexing the tax rates to inflation, is that a left Government can’t use high inflation as a back door way to boost tax revenue.