Wednesday, October 8, 2008

POLICY: National's Full Tax Plan

National's Leader John Key has announced his party's tax package, which details changes to personal income tax rates and thresholds, and the introduction of an Independent Earner Rebate.

"Taxes affect decisions to work, save, spend, or invest, so tax can have a big impact on economic growth and future prosperity.

"Our tax policy is one of responsible reform. People want to know that valued public services will be protected and that effort will be rewarded. Business wants to know that competitiveness will be maintained and that consumer confidence will be supported."

Mr Key has reiterated that the package announced today requires no additional borrowing, or cuts to frontline services to fund it.

"There is, in fact, a small saving to be made, of $283 million, which will be used to begin reducing the operating deficit.

"The 2008 package sets out a three-year programme of personal tax cuts beginning 1 April next year. It delivers rate and threshold adjustments that will see those on the average wage better off by $47 each week."

As National has previously stated, this includes the just-introduced October 1 tax cut.

Mr Key says National will also introduce a weekly rebate for independent earners. These are personal income-tax payers with an annual income between $24,000 and $50,000 and who do not receive any form of financial entitlements from the government.

The rebate in 2009 will be $10 per week ($520 a year) and will increase to $15 per week ($780 a year) from 1 April 2010.

"We have ensured that our 2008 package is appropriate for the current conditions. We have also ensured that it does not restrict future movement on rates and thresholds. Taxpayers won't have to wait nine years to get a tax cut under National.

"Our medium-term goal is to deliver a three-tier personal tax system with the highest rate of no more than 33% on income above $50,000. This is what we will work towards as future economic conditions allow."

Click to download Tax Policy Paper (PDF) 

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