Opinion on National’s tax policy
Posted October 8, 2008on:
I’ll be honest, I don’t think too much of it. I view tax as a structural thing that just needs to be set. Both National and Labour have this “incrementalist” view of changes taxes, which gives the potential for shifts in policy and creates uncertainty in the economic environment.
I am also disappointed that they leave the tax bands fixed – when inflation adjustment of the tax thresholds is the only way to ensure that the real tax burden isn’t rising over time.
Finally the independent earner rebate seems like an ad hoc addition that they tacked on in order to provide “$47” relief to the “average worker”. This policy does nothing to increase efficiency in the economy – the very issue that National said it was trying to chase.
The reduction of the 39c tax band makes sense – as it is a dis-incentive to save and punishes people with highly variable annual income. But reducing it at 1c a year is just too slow for a structural issue like tax policy – if it is going to grow the economy so much, why not just cut the damned thing now.