The ACT Party has scaled back its plans for tax reform because it says the poor state of the economy gives it little room to manoeuvre.
Among the changes from its earlier hopes is a rise in the top tax rate for highly paid people.
"This is the problem with Grant Robertson's budget," the party leader David Seymour says.
"There is no gas left in the tank, the cupboard is bare, he has spent it all."
As a result, the party has unveiled a revised Alternative Budget, which entails sweeping plans to transform state finances and the tax system that pays for them.
But they are less sweeping than was envisioned earlier.
"I have to be honest, we are in a hole," Seymour says.
"Every time we get a fiscal update from Grant Robertson, the circumstances are worse."
So the party has revised its original plan for two tax rates, 17.5% and 28%, and is now proposing three, with a top rate of 33%.
Implementation is also deferred til the 2026-27 financial year. When all the changes are in, a 30% tax rate will stay until people earn $180,000 a year, and increase to 33% for income above that rate.
People earning below $14,000 a year would pay more tax than they do now, though ACT says there would be a tax credit to offset this.
Other parts of the Alternative Budget involve transferring the income from the Emissions Trading Scheme (ETS) from the Government to ordinary New Zealanders.
Based on Treasury’s forecasts for ETS revenues, it says payments to people would be $243 this financial year, slowing to $98 in 2027-27.
ACT also wants to abolish the Bright Line Test entirely, not reduce its threshold from ten years to two, as National plans to do. This test requires sales of investment properties to incur tax as a matter of course, depending on how long they have been owned for. But ACT says this is a capital gains tax by stealth, which makes it harder for people to plan their lives.
As revealed earlier, the party wants to increase the capacity of the adult prison system by a further 524 prisoners each year. Prisons would also take over the role of dealing with youth offenders, which would free up 160 beds at Oranga Tamariki for children in state care.
Also in ACT's plan is more defence spending, shrinkage of core Public Service numbers back to 2017 levels, an increase in public transport fares to make up half the cost of running the services and an end to the Healthy Schools Lunch Programme , which the party says involves huge waste.
ACT would gradually increase the NZ Super age to 67, at a rate of 3 months per year from the 2024 - 25 year. Once the age reached 67, it would be indexed to life expectancy, which it says would ensure the sustainability of the pension over time.
However, people would still be able to withdraw KiwiSaver funds at 65.
Entire Government programmes would be abolished, such as the Climate Emergency Response Fund, the Energy Efficiency and Conservation Authority and the Climate Change Commission. Also to go would be the Provincial Growth Fund, Callaghan Innovation, domestic and international film subsidies, workforce development councils and other things.
Even more dramatically, entire "demographic" Ministries would go, such as the Ministry for Women, the Ministry for Pacific Peoples, the Ministry of Māori Development, the Ministry for Ethnic Communities, the Office for Crown-Māori Relations and the Human Rights Commission.
It says none of these changes would affect Whanau Ora or Treaty Settlements. It says the Ministries being targeted often replicate the work done by other agencies.
ACT would also halt contributions to the Super Fund while debt is outstanding, calling current policy "a leveraged bet by the Government on the stock market with taxpayers’ money.
"If taxpayers wish to invest in the stock market, they are allowed to do so. The Government should not force them to do so via proxy," Seymour says.
Similar arguments apply to the Venture Capital Fund.
In another dramatic proposal, ACT would sell down the Government stake in a number of ventures. It says the Mixed Ownership Model, which gives the state 51% of organisations such as the main electricity companies, should be applied to other state owned enterprises such as AsureQuality, New Zealand Post, KiwiRail (and the Railways Corporation), Transpower, Kordia, and others.
Kiwi Group Holdings, which owns KiwiBank and its subsidiaries, would get the same treatment, but one state agency, the farming group Landcorp, or Pamu, would be sold off entirely.
ACT envisages its programme would see State finances move from a deficit this year of $10.98 billion to a surplus of $2.73 billion in 2026 - 27.
The party is also taking aim at "middle class welfare" such as Fees Free University studies and an untargeted winter energy payment.
58 Comments
So a NACT government will sell off the family silver, huh?
The hole in National's budget suddenly filled and explained ... By their partner in crime.
Of course, National will say ACT forced their hand while they never intended to sell anything. A Tui moment if ever there was one.
I thought it was more along the lines of "spend the money investing in upgrading our hospitals, and we will set up a leaseback arrangement". I don't necessarily agree with the idea, but the alternative is the Government just adds to the debt pile and gets it done?
..reinvested in ..tax cuts.
NZ has been in business for nearly 200 years... and yet we still carry debt. Its long past time to start living within our means. Never paying off your credit card is no way to prosperity. And neither is selling your house and renting it back.
People earning below $14,000 a year would pay more tax than they do now, though ACT says there would be a tax credit to offset this.
I really don’t understand this. Why not just set the tax brackets so people earning under that don’t get a tax increase? All this talk about making it simpler then they go and make it more complex.
But the higher taxes at the other end will also discourage additional work, and those people are already earning so easier for them to get more money. I suspect the reason for the higher min tax bracket + tax credit instead of lower min tax bracket and higher upper tax brackets is because of lower marginal tax rates at the upper end being more effective at encouraging more taxable activity than at the lower end.
With ACT it's the hypocrisy that annoys me more than anything. They claim to be changing the tax bracket to "reduce complexity" but then they turn around and make the whole thing more complicated than it is now.
For all our tax systems faults complexity isn't one of them. It's remarkably simple compared to many other countries that we would typically compare ourselves to.
Well actually there kinda is..
Liz Gunns nutter party has cocked up their forms to the electoral commission with the result that they can only ever have a maximum of 2 MPs. So if 30% of the voters voted for them, we would have a total of something like only 85 MPs, with Liz nowhere near the levers of power. I'd vote for that.
I was impressed that Seymour had the courage to propose increasing the age of super eligibility. Never going to be a vote winner but something we have to address or face a bankrupt country. Don’t have the stats to hand but thought the amount of super we are forecast to pay in the next 20-30 years was almost equal to the entire forecast tax take for the same period. We can’t ignore the problem forever.
The main problem in New Zealand would be cost of housing this relates to rents and house prices both need to come down more, a government fund should be allocated to building social housing and no foreign buyers,land bankers and BNBs should be taxed more,rental price’s should be only increased at inflation level anyone charging more than $3 per square metre of building area should be made to reduce price and refund to renter.
any property’s owned by foreign business or overseas investors should pay fees making it a unprofitable.
this will bring down crime and cost associated housing
tax should not be paid on first 20k after which the tax system is ok.
cost of living any food products from New Zealand should be sold here at reduced rate or no gst. It’s crazy that meat and dairy products are so expensive these changes will help lower inflation.
Smiley face sticker for effort. But that’s about where it stops here. At least they have something written on paper.
Do wonder if they want 2017 FTE or nominal spend.
Anyway, what are we trying to achieve by selling the house to rent it back?
Also sending strong messages to workers: work harder for longer for less.
Truly shocking. Not a progressive or forward-thinking policy in sight. While the rest of the world moves forward, New Zealand under ACT will be stuck with an outdated mindset that's proven to be unsustainable (and not just in an environmental sense).
It's really too bad none of the other major parties can do any better.
Wow - they're going full hog back to 1984.
I think the crisis was a bit bigger then and the fallout - well, we're still paying for it in social costs.
A big dose of carpe diem, from his major benefactors, me thinks.
Sadly, my guess is Luxon will be fine with all this.
"The debt story is eye watering. From net core Crown debt of $57.5 billion when Labour took office, it is expected to be $181.6 billion by the end of this financial year, rising to an astonishing $195 billion by 2027.
Auditor-General has expressed grave concerns over a lack of accountability for spending by Labour."
https://www.nzcpr.com/opening-the-books/
I wish the media just came out and said that Nation States are effectively obsolete, and instead are now regional economic zones. And that democracy isn't the population deciding how to run the country, but instead just deciding who's going to administer what is an extension of the global rules based system.
But then the media are just messengers, rather than deliverers of truth.
Government debt is simply a measure of our monetary base of NZ Dollar currency created by the government through its spending. When the government runs a deficit this creates a financial surplus for households to add to their savings. https://theconversation.com/how-government-deficits-fund-private-saving…
Inflation has eroded the value of debt, it's mischievous to quote raw numbers rather than a percentage.
And our government debt is fine, we still have a triple A S&P rating, the IMF and rating agencies are happy with the way the economy was handled during Covid.
What is a problem and never gets mentioned is our high household debt, driven up by our housing bubble. And of course that debt will rise further as the property ponzi is reignited by NACT.
What's sick about working at 67? Many people can and should. Its strange that we accept that once someone reaches the magical (arbitrary) age of 65 they somehow deserve to receive an ongoing taxpayer funded prize, regardless of need. Its craziness. Not only does it need to be increased, but it needs to be means tested. My age group will be simultaneously having to deal with rapid increase in retirement costs, associated health system costs, unaffordable housing, student loan debt, high interest rates, out of control inflation, the need to invest in broken infrastructure, the list goes on. Oldies can't expect these costs to be shouldered by a shallow population pool. It's no wonder people are having less kids. We can't afford it!
if act is so genuene, y not impose not tax till 60k and , impose the extra 17.5 from above 60k.
only thing act does good is the sharing 50% gst with the council.. remaining all fake.
nats have 20$ per week in tax cuts.... u people take 1500 or 2k through OCR using reserve bank a month and u pay back 80$ .... whaoh wat a relief ...that's a lotto
and labour and its finance guys. everything, this food crisis is all cos of u.
u got 10s of millions of dollars to spend on cycleway, garden beautification, but u cant see people living hungry?
u are pocketing all OCR money through the backdoor and spending lavishly.
who the ... are u to take money from one pocket to pay the other.
tax is paid by people for people to meet their needs not to spend for so called well-being..
most of your well-being money is spend to pay employees who run the well being.... the victims don't get that money but ur every employee get a 100k
who are you fooling with GDP... GDP doesn't mean people are not hungry... any country can be high on GDP with low human development index.
u were selling land to developers and making huge profits and that is behind the whole inflation initially, Then you're charging 50k on a new build , that is inflationary too.
can you give an example of something which can make money from outside of new Zealand.
even a piece of meat is so expensive ,
u r fooling people with minimum wage which is inflationary., show one country that reduced poverty and hunger with minimum wage. if then why not remove tax for people suffering, if you really want to help.
people pay more tax for second job u think it is clever wooh u are making people not to work.
if someone who were not working if suddenly start working.... u will ask him to pay back the whole money they got so far,... and u think they will find a job after knowing that.?
You are making people's life terrible, 2 couples working all the week cant survive, but ur system pays enough for one working in the government department to run a joint family or pay 2 mortgages..
WHY CANT THE OCR AMOUNT YOU RECEIVE PAY OF BORROWER'S DEBTS TO REDUCE INFLATION and stop spending? OR TELL US HOW MUCH FDI CAME IN THE LAST ONE YEAR.
(to make people believe that keeping interest rate hight is working even when it is not paying debts ) borrowers.
u are talking rubbish with terms and numbers all the time. not just u most of the parties.
NATS head seems like he dont know anything,which si a good thing. so he will at least ask
ACT acts like it know everything.very dangerous, I would say nats should not give much space to act. look at his idea of retirement age
Look at about finance guy he acts like he know everything, does it all matter, after all people are hungry , look at his gestures as a response in parliament,
WHY IS THERE AN ELECTION, WHY PARTY WITH THE MAJORITY MAKE THE GOVT? because u r elected to help the voters live a better life. not to implement your ideas about things which are least bothered by people
Entire government department to stop. Yes please.
Stop, go away.
And a zillion quangos go too please.
Oh. And a bunch of "Commissioners"
The thing is somebody has a pet idea. A bureaucracy is created, does nothing much. The problem is not making them efficient. It's that they were a crap idea in the first place.
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