Election 2023: Will National still deliver its tax cuts? Economist Cameron Bagrie says it depends

If New Zealanders are going to get tax relief, it's all going to depend on what the fiscal conditions are when the incoming Government opens the books, says economist Cameron Bagrie.  

The National Party, which will lead the next Government, unveiled its tax cut plans during the election campaign - but the Nats' likely coalition partner NZ First did not think National could make the numbers stack up.  

"What I've said to [National leader and deputy leader] Mr Luxon and Nicola Willis is, 'Come on, show me the spreadsheet that this stacks up - I'm open-minded, I'll look at, I'll reserve my decision until I've seen how it stacks up,'" NZ First leader Winston Peters told Newshub Nation before the election.   

Bagrie, an independent economist, said stacking National's numbers up was "possible - that's not to be mixed up with thinking they were probable".  

But there was still "the potential" of National's plan coming to fruition under the incoming Coalition Government, he told AM.  

"Everything is subject to the fiscal conditions - the economic climate. Certainly, they talked a big game within the election regarding what's called 'tax relief' - I'd characterise tax relief as a little bit different from a full-blown tax cut."  

Labour leader Chris Hipkins opposed National's tax cuts during the election campaign, but also faced criticism over his own policy to remove GST from fruit and vegetables.  

"We've seen the National Party's policy starting to fall to pieces under scrutiny," he told AM in September.  

National has said it wanted to deliver tax relief for lower-middle income New Zealanders. At present, tax thresholds are not indexed to inflation - meaning earners move into higher brackets as consumer prices rise.  

By National indexing thresholds, as it promised to do with its relief package, Bagrie said it would be fixing a tax "thievery".  

"It's getting a little bit absurd when someone's on about $25 and hour, you work 40 hours - there's $1000. One-thousand times 52 is $52,000 now, low and behold, you're paying 30 cents on $1 because that tax bracket kicks in at $48,000."  

But fixing these "absurdities" doesn't come cheap.  

"The problem with their tax relief package is... the finance of it," said Bagrie. "Where's the money going to come from?"  

That's because, in the view of many economists, National was being too optimistic about how much the Government would make from its proposed foreign buyers' tax - which made up a large portion of its policy.  

"I looked at the numbers, were the numbers possible? The numbers were possible," Bagrie said. "That's not to be mixed up with thinking they were probable because they were not highly probable."  

Regardless, he said fiscal policy was going to be a delicate balancing act for the incoming Government.  

"The bigger picture to me is, we've got a pretty divided economy and society at the moment - we need to move forward."  

That would require consensus from across the political spectrum on economic policies, he said.