Show me your principles…

Oh, how the mighty have fallen.

Act (values not politics!) has released its tax policy and it is, well, remarkable only for its lack of audacity. A flat tax? Nope. People earning $38,000 or more would pay 25% tax under Act’s 2005 policy, and people earning less than that would pay 15%. They are, like everyone else, standing behind a progressive income tax system. I think “stealing from the rich to give to the poor” is what some of their supporters would call this.

Alas, even Act has met Mr Pragmatism and Mrs Compromise. Oh, for the days when Act was doggedly ideological.

In 1996, it released a “manifesto economic policy statement”, which advocated a single 19.5% rate of income tax. Effectively, it was a single 12.5% rate of income tax, because the other seven cents would go into a private pension fund for each taxpayer. In 1999, its economic policy said “a centrepiece of Act’s policy will be the introduction of a flat rate of income tax”. In 2002, its economic policy said Act would move to a “flatter tax rate structure”, and aimed to have a top rate of personal income tax of no more than 20%.

So, what do we have in 2005? Well, none of the above. The top tax rate is 25%. Flat tax, which was the centrepiece of the 1996 policy document, isn’t even mentioned in its 2005 counterpart. This muddying of the waters seems very difficult to fathom. Presumably the strategy is to appear less “extreme”. In 1999, Jenny Shipley labelled Act’s tax plans “extreme”, and perhaps Act has become scared of appearing as such. But there’s a lot to be said for simplicity, especially when you’re a low-tax, pro-business party.

And the statement, “it’s only fair that everyone pays the same rate of tax” has a nice ring to it. But, “well, umm, er, we want a flatter tax system, but not quite a flat one” just doesn’t.

And it’s not like Act will ever have to actually implement its tax policy, so who cares how affordable it is? Having Rodney Hide saying on the radio this morning that he could pay for his tax policy out of the Government’s surplus just made him sound like another National Party leader. Where’s the difference? Where’s the ballsy policy?

Which all leads me to wonder one more thing: has Rodney lost his mojo?

1 Comment Posted

  1. The reason ACT don’t have a flat tax policy is because a flat rate of 25% would actually represent a tax INCREASE for those on low incomes. Of course they don’t want that because they want people on low incomes to get ahead.

    The current policy represents a tax break for everyone. It can happen tomorrow with no cuts to government spending.

    To be honest, I can’t figure out what you’re complaining about. You can’t fight the substance of the policy, so you try to accuse them of “inconsistency” as if that means something. Argumentum ad hominem.

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