Russel Norman

Nats tax bill costs the low paid

by Russel Norman

Nats yesterday introduced their tax bill. They dropped the bill on parliament without giving anyone a chance to read it before it hit the house and are pushing it through under urgency without giving a select committee or anyone else a chance to examine it properly. Even the Regulatory Impact Assessment stated that they hadn’t enough time to do the job properly. So much for good process. Nats complained about the ETS and the EFA after they went through an extensive select committee process.

The bill replaces the tax cuts voted in by the last parliament. The tax cuts voted by the last parliament haven’t all come into force yet but if left alone would roll out over the next few years.

The Nats tax bill replaces the last bill and reduces the tax cut of low earners while increasing the tax cuts for those earning upwards of $100,000. Yep, you heard it right. The Nats bill means that low income earners will pay more taxes than if the parliament did nothing. And it means that high income earners pay less tax.

To test this proposition, Michael Cullen moved an amendment to the effect that if any taxpayer found themselves worse off under the Nats tax act then they could get their money back. Bill English as Finance Minister put in a financial veto – that is the government can block an amendment if it has a significant fiscal impact – saying that it would cost $750m if Cullen’s amendment got up. What English was admitting was that taxpayers will be $750m worse off under Nats tax bill then under the existing tax cut law.

Then bizarrely English withdrew the financial veto so the amendment could be voted on. National, Act, Maori, United voted against the amendment, effectively admitting the truth that their tax bill take tax cuts off the low paid.

National and Act voting for such a bill makes sense, but the odd thing is that the Maori Party would vote for a bill that takes money off the poor and gives it to the rich. Sitting in the House tonight, National kept a very close eye on the Maori party. Rahui Katene was given very close attention by Tau Henare.

I think the Nats want to rush this through so that people won’t realise the true situation. Most taxpayers will get a tax cut next year and will think National did it. They won’t realise that they were going to get a tax cut anyway and if they are a low income earner they would’ve got a bigger tax cut.

Published in Economy, Work, & Welfare | Justice & Democracy by Russel Norman on Wed, December 10th, 2008   

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