Government cancels tax cuts

Stuff reports:

Finance Minister Bill English has outlined a Budget plan that promises cake today but gruel tomorrow – and marries the justifiable with the downright perverse.

The justified part is his decision to spend more this year and put on ice plans for a 2017 tax cut.

Population growth, especially from migration, is putting real pressure particularly on health and education that the existing $1 billion allowance for new spending simply cannot meet. A significant hike can be expected to both when Bill English stands to deliver his eighth Budget on May 26.

The Government’s “investment approach” to social issues, that favours a dollar spent now to save two dollars later, will also demand extra resources.

That will be funded by dismembering his 2017 election year war chest of $2.5b – of which $1.5b was earmarked for tax cuts.

They are now off the agenda, pending a significant improvement in the economic and fiscal situation, though English insists they are still a priority.

I think this is pretty appalling. If the Government can’t deliver any tax relief in next year’s Budget, then I don’t think they ever will. Due to fiscal drag, most New Zealanders end up every year paying a slightly higher proportion of their income in tax than the year before. I want a Government that slows or reduces the proportion of income people pay in tax – not one that allows it to keep increasing.

The Government has done a good job keeping spending under control, and the exceptional circumstances of the Global Financial Crisis and the Canterbury Earthquakes have meant that tax cuts prior to now were fiscally difficult. But patience will run out, if there are no tax cuts announced in 2017.