National leader Simon Bridges is submitting a Member's Bill this week which would see income tax linked to inflation.
Bridges floated the idea in January during his State of the Nation speech, when he said income tax would be linked to inflation if National was elected in 2020.
He said at the time National would amend the Income Tax Act so that tax thresholds would be adjusted every three years to keep tax in line with the cost of living.
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Treasury would advise the Government on how much it should be adjusted for inflation, which Bridges said would prevent New Zealanders from moving into higher tax brackets when their income wasn't keeping up with rising living costs.
Bridges has now drafted a Member's Bill, the Income Tax (Adjustable of Taxable Income Ranges) Amendment Bill, to go into the Ballot because he believes Kiwis deserve a fairer tax system.
"More red tape and taxes from this Government means New Zealanders' incomes are struggling to keep up with the rising cost of living. My Bill will ensure that governments are required to adjust tax thresholds for inflation, or explain to the public why not."
The National leader 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.
He said 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.
Asked why he's submitting it as a Member's Bill, Bridges told Newshub it's a "good way to progress it" and that it would "make a real point around tax and Kiwis keeping more of what they earn".
"What that really means, I think, is as living costs rise, we ensure that Kiwis can keep up with that and also that there isn't increasing taxes on New Zealanders by stealth."
Bridges said the current tax system is "pretty good and fit for purpose" but that as inflation goes up, middle-income earners are being duped as they "slip into the top tax bracket" of 33 percent.
To prevent that, he said every three years "we would see the tax rates adjusted".
The submission of Bridges' Bill comes almost a week after Prime Minster Jacinda Ardern announced the Government would not introduce a capital gains tax, despite its Tax Working Group officially recommending one.
Bridges said it was his party's "relentless opposition" to the tax that "forced the result" of the Government's decision.
He also said National would not introduce any new taxes if elected in 2020.