Labour drops tax cuts in favour of $1.5B of new spending

Wednesday 22nd January 2014 3 Comments

The Labour Party is ditching two of its flagship tax initiatives from the last election, giving itself an extra $1.5 billion for alternative policy promises.

Labour leader David Cunliffe announced the changes, which will see Labour drop its proposal to exempt fresh fruit and vegetables from GST and the first $5,000 of earnings from income tax.

The GST promise, while politically popular, was criticised by tax experts as creating a compliance minefield for retailers, while the $5,000 tax exemption threshold would have benefited wealthy people as much as low income earners while undermining one of the most reliable parts of the tax base.

Cunliffe said the changes would allow Labour "to create fresh opportunities for all New Zealanders."

"As leader, I have been reassessing how to give Kiwis the best bang for their hard-earned bucks. We will be removing the previously proposed $5000 tax-free zone and the GST exemption on fresh fruit and vegetables.

"This decision frees up around $1.5 billion per annum," Cunliffe said in a statement.

"While these were worthwhile policies, we believe there are better ways to help struggling Kiwi families."

Some flavour of policies that could be funded by the revenue freed up by dropping both promises would be outlined in his State of the Nation speech next Monday.

BusinessDesk.co.nz

Comments from our readers

On 22 January 2014 at 12:38 pm Max Lewis said:

Labour's policies are to penalise the successful kiwis to give to the poor, while National are focused on building a bigger economy so every kiwi will prosper.

On 23 January 2014 at 6:17 pm Paulus said:

"This decision frees up around $1.5 billion per annum," Cunliffe said in a statement. Got to love it how he conjured $1.5b out of thin air.

On 29 January 2014 at 1:50 pm Tony said:

The leader of the Labour Party is either completely deluded or extremely arrogant if he thinks that voters are so stupid that they wouldn't spot the non existent savings that he claimed to be making.