NZ Election 2020: National promises 16-month tax cuts if elected, '$3000 into back pockets of average earners'

The National Party is promising temporary tax cuts if elected by increasing the tax thresholds, which it says would put "$3000 into the back pockets of average earners". 

The temporary tax cuts, which would last for 16 months, would mean Kiwis earning $50,000 a year would save $893 over that period, while someone earning $70,000 would save $3226. 

The policy is expected to cost about $4.7 billion and National plans to pay for it by cutting back on spending, such as suspending Super Fund contributions and eliminating the fees-free university policy and KiwiBuild. 

National plans to increase tax thresholds by lifting the bottom bracket from $14,000 to $20,000, the middle threshold from $48,000 to $64,000 and the top bracket from $70,000 to $90,000 - changes it wants in place by December. 

Kiwis are currently taxed at 17.5 percent on income between $14,000 and $48,000, and National plans to raise that bar so that you're only taxed at 17.5 percent on income between $20,000 and $64,000. 

What does that mean? If you earn $50,000 a year - which is roughly New Zealand's median income - you would save about $12 a week or $893 over the 16-month period for which the tax brackets would be altered. 

"It's clear New Zealand is in for a tough year in 2021 and we will need more stimulus to avoid prolonging the recession and to reduce the economic and social scarring," National Party leader Judith Collins said on Friday. 

"To keep our economy ticking, New Zealanders need more money to spend. National will deliver temporary tax relief that puts more than $3000 - or nearly $50 a week - into the back pockets of average earners over the next 16 months.

"This will give Kiwis the confidence to go out and spend, which will be crucial for our retail, tourism and hospitality businesses to survive this economic crisis."

Labour announced its tax policy last week, revealing plans to introduce a new top tax rate of 39 percent on income earned above $180,000, but is promised no new taxes or any further increases to income tax if it wins another term. 

National's finance spokesperson Paul Goldsmith said on Friday he has ditched the goal of 30 percent debt to GDP in about 10 years, a decision he made after viewing the Government's books on Wednesday when PREFU was unveiled. 

Goldsmith said National now plans to get debt to 35 percent of GDP by 2034, compared to Labour which by that time will get debt to 48 percent of GDP. 

"Our projections show we can return debt back to 35 percent of GDP by 2034 compared to the PREFU forecast of 48 percent."