Finance Minister Grant Robertson blasts National's 'reckless, empty' tax promise

Grant Robertson has blasted National's proposal to link income tax to inflation to help with high living costs, calling it "reckless" and "empty". 

The Finance Minister has questioned the $650 million cost of the policy, proposed by National leader Simon Bridges in his State of the Nation speech on Wednesday. 

"National has got some serious explaining to do about how they're going to afford their tax promises," Mr Robertson said. 

Mr Bridges said National would amend the Income Tax Act so that tax thresholds are adjusted every three years to keep tax in line with the growing cost of living. 

The Treasury would advise the Government on how much it should be adjusted for inflation, which according to Mr Bridges would bring huge benefits to Kiwis. 

He said the first adjustment would prevent Kiwis from paying an extra $650 million a year in tax, based on the Treasury's 'Aggregate Personal Income Tax Revenues Estimate Tool' for 2018/2019. 

"Assuming inflation of 2 percent, someone on the average wage would be $430 a year better off after the first adjustment, $900 after the second and $1,400 after the third," Mr Bridges said. 

But Mr Robertson said he doesn't understand where the money's coming from, and said New Zealanders will be questioning if the policy is "really worth it". 

"Simon Bridges seems to have found Steven Joyce's fiscal hole in his backyard," he said.

"If we take the numbers at face value, it is worth $8 per week to the average earner in 2021. For someone on $40,000 a year, it would be $1 per week.

"For the cuts to services that would be needed to pay for it, this is small change."

He said the National leader "needs to front up on how he is going to pay for his tax changes, otherwise it is just a reckless, empty promise".

Bumping tax thresholds in line with inflation is not new. In fact, former Labour Finance Minister Sir Michael Cullen announced it in 2005. 

It became known as the infamous "chewing gum" tax cuts because the savings could barely buy you a packet of gum, and Mr Cullen copped so much flack he scrapped the idea. 


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