Key says Govt looking at $3 bln tax cut, either in Budget 2017 or before 2017 election; still committed to cutting net debt to 20% of GDP

Key says Govt looking at $3 bln tax cut, either in Budget 2017 or before 2017 election; still committed to cutting net debt to 20% of GDP

By Bernard Hickey

Prime Minister John Key has downplayed Finance Minister Bill English's comments about tax cuts being less likely in 2017, saying that the Government was still committed to announcing income tax cuts worth around NZ$3 billion before the next election, either to be announced in Budget 2017 or campaigned for in the lead-up to the late 2017 election.

"Philosophically there's quite a lot of support in our cabinet for tax cuts," Key told his weekly post-cabinet news conference.

He said rising average wages meant many were approaching the NZ$70,000 per annum threshold for the 33% top tax rate and the Government wanted to address the issue of bracket creep.

Key said the Government had considered introducing a tax package in Budget 2016 due on May 26, but that fiscal conditions would not allow it, given heavy health and education spending demands because of record high migration and the Government's commitment to reducing net debt from 25% of GDP to around 20% by 2020.

He said the conditions would have allowed tax reductions of around NZ$1 billion, but the Government wanted to announce something meaningful.

Key said current fiscal conditions probably justified the announcement of significant tax cuts in Budget 2017, but many factors would have to be taken into account before then.

English surprised a few people last Thursday when he said fiscal conditions meant a NZ$2.5 billion spending allowance for tax cuts in 2017 had been re-allocated for debt reduction and extra spending in 2016 to cope with population growth, although he had been careful not to rule out signalling a tax cut in 2017.

ACT Leader and Epsom MP David Seymour, who supports the Government on most Parliamentary votes, attacked Key's credibility on tax cuts earlier today, saying the Prime Minister should have announced tax cuts sooner to offset bracket creep.

"Even a NZ$3 billion tax cut in 2018 would barely cancel out the NZ$2.1 billion cost of bracket creep since the last round of tax reforms.  It would be more of a ‘tax reset’ than a tax cut," Seymour said.

"“It’s ridiculous that politicians can jump up and down every few years and claim to be cutting tax, when they’re really just correcting for inflation pushing earnings into higher tax brackets," he said.

'Homelessness not new'

Key was asked again about reports of growing numbers of families living in the backs of cars, in mini-vans and in garages in Auckland.

"I don't think the issue of somebody living in a homeless situation is new. It's been there for a very long period of time. We are there to provide support as best we possibly can. All I can say to people is. If somebody is homeless, they should go and see Work and Income," he said.

Asked if he thought it was a growing problem, Key said he did not think the data was perfect.

"A lot of what we see is anecdotal. It doesn't mean there aren't bigger numbers. I accept there may well be, but no one has absolutely perfect information of that. We've been working as a Government with the people that provide support in this area -- the shelters, the Salvation Army -- and that's one of the reasons you saw the Government respond with the NZ$41 million for supplementary housing to help people in greatest need," he said.

(Updated with more detail)

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14
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"Philosophically there's quite a lot of support in our cabinet for tax cuts," Key told his weekly post-cabinet news conference.

Translation: There ain't no way we're ever gonna solve housing problems or poverty, or make any headway into problems with the health and education systems, so let's give it all away in a lolly scramble and earn us a few votes.

National Economics 101: 2+2=5; and 2+2=4; neva forget this

18
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has he seen some polling that things are not going well,
needing to take the discussion away from housing and trusts as it is starting to hurt
so early to be coming out with an election bribe.

12
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And so Key will use your money to bribe you for your vote.

BB3... I would rather he used my money to get my vote than use my money to get someone else's vote..aka the opposition

polls out todays nat 46% lab 27 green 12 nz first 11
not surprised now about the election bribe, NZ first are getting stronger at the expense of national

Ironically National are the globalist party.

Yeah, just stick it on the credit card.

Isnt it like poker, the oposition says ill raise you one billion etc etc?
Depends on who gets the tax break i guess.

My hand is in the air. You know what they say, 'here a billion, there a billion', pretty soon it adds up to real money!

We are getting good at this budget business, will be able to apply for minister of finance job soon.
Might have to buy a suit and fix the punctuation.

What?!?, I may have worn a suit at times in the past -- but I steadfastly refuse to give up my poor punctuation!

A man has his limits you know.

do what - stand back, it gets hot when we are channeling Trump.

the number is too small. by the end of the week the number committed to announcing will be nz$ 507 bn.

why you ask- grasshopper?
+ 507 is the dialing code for Panama.

easy-peasy-lemon-squeezy

15
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Sorry JK No amount of loose bribes will get this vote......ever

I don't see it as a bribe , if the Government does not need the money , why did it take it away from us in the first place ?

John Key is right to give it back to us by tax cuts

I am fully behind tax cuts , and I will vote for tax cuts ....... F(_) (#... Capital Gains Tax , that's like a turkey voting for an early Christmas

I don't see it as a bribe , if the Government does not need the money , why did it take it away from us in the first place ?

Seems as though the NZDMO was ordered to get in early to borrow the tax break, so some may forget that is how it was funded.

$1.850 billion new government IOUs were fabricated in April 2016 and sold to foreigners in all probability. View Graph

This government has borrowed Billions of dollars using you and every other New Zealander as collateral. It has not stopped the spending it has simply borrowed the money to do it. Voting for these people is like a turkey voting for Christmas. It is taxing us like mad and borrowing like made and importing vast numbers of people for whom our economy offers very little, in that every additional person reduces our GDP per person.

17
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So what would his tax cut give me, earning 150k per annum? Maybe $30 or $40 extra pw? I would much rather see it go to education, health, housing

you are free to set up an auto payment of $40/week to your local school if you wish..
bet you don't...

17
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Sorry???
My point is this is just lowest common denominator vote buying. Something will suffer if he cuts taxes and that is likely to be things like education, healthcare etc.
Its my or your choice to donate or not donate. But will more than say 10 per cent of those who get tax cuts donate it all? I doubt it.
You also probably support the 'stop rates growth' lobby. Know the cost of everything and the value of nothing...

I just replied to YOUR comment that you earn $150k /year and rather than a tax cut spend the $40 you would have got on health and education...well you can(at least you know it will go directly to the school and not be swallowed up by bureaucratic waste.
when in the last 8 years have there been cuts to the sectors you want to help?answer NEVER.
Health and education are bottomless pits..
What I think English is trying to do is to eliminate the fiscal drag.
Cullen never did this(the tosser)
It wont be long before the average wage is ($68k?)is in the top tax bracket ($70k?)
I know the value of plenty actually..better I'm sure than the shiny arses that would rather spend it for me.

Sorry on reflection if there are tax cuts the something will have to suffer..
.. namely...the installation of gender neutral toilets in all govt buildings(including schools hospitals) will have to go on hold for a least a year..
how will we survive?

10
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Yeah what a tosser Cullen must have been, ran a suprlus 9 years in a row, and paid off billions in government debt, while running a public service where people could actually get operations in hospitals, schools had more money to operate, setup Kiwibank, Kiwi saver etc, what a tosser.
I'm sure everyone would rather have a finance minister like English who loads up generations to come with about 70 billion government debt in record time, with absolutely nothing to show for it, runs the public service down to a complete joke, the police won't come to anything unless someone is practically getting murdered there and then, the country has gone down the tubes big time in the last 8 years.

arh rose coloured glasses mate.
Cullen was a tosser.
He doubled the public sector for not tangable benefit.
as for health we had to go to Aussie for operations as our nz system couldn't cope.
he shut down plenty of schools.The education sector had no direction as was less well funded than today
he tax the "rich pricks" so that they went to Australia..they are now only just coming back.
he indirectly taxed the rest of us by hiking up power prices/road taxes.., acc to help pay for his crazy schemes like buying back the railways(I think Toll have a party every year on the anniversary to celebrate his ineptness)
he had the country broke and in recession long before the rest or the world had the GFC.
Crime stats show improvements...the smacking bill/dog chipping bills have not had the intended outcomes..no surprises there
philthy you are obviously from the "gliding on " generation...bitter but wrong..

I can almost decipher your writing

Cullen did not have all the GFC and quakes to deal with

..or the boom in dairy which national have run with big time, cheerleading the dairy boom as an ever increasing opportunity.

The GFC was an opportunity squandered by national, we went in with almonst no debt, had the cheapest borrowing rates in the history of the world and guess what 8 years later we have massive infastructure issues.
that the problem with our politicians, they will only do what is needed to get relected not set up the country for the next fifty years

The greatest benefit to his opponents will be that they will be able to put forwards ideas on how to spend that $3bn in furtherance of their policies without Key/English criticism.

I'll tell you what, if you vote me to be Prime Minister I am almost certain I can do a tax cut of $3.1B.

It's too easy. As PM I will borrow the same $3b but I will spent it on police, education and health. If any of it cannot be spent then it will be put towards the $5b interest bill on the government's debt. Yes that's right borrow to pay interest.

In theory the interest is already factored in value of current surplus. You would therefore be borrowing to pay the principal = 0 sum gain

Are we not still borrowing??

That depends on who is "we".

The government (public accounts) just posted a surplus:
http://www.interest.co.nz/bonds/81491/treasury-reports-nz167-mln-obegal-...

Undoubtably private debt continues to rise ..

how about getting this under control rather than kick the can down the road for others to clean up the mess you created
http://www.nationaldebtclocks.org/debtclock/newzealand

Its still rising... yet we have a small 9mth surplus.

That link seems to be a measure of total debt, public and private. Even if the government never borrowed another cent if all other forms of debt keep increasing then so does the total.

no its only government debt, all debt is around 270% of GDP
http://www.treasury.govt.nz/government/financialstatements/yearend/jun15...

14
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Well many thought it but now jk has opened his mouth and removed all doubt. How are we to have a decent future for this country if our own prime minister is prepared to buy votes with blatent disregard for the debt built up on his watch? This policy is in National's best interest but it isn't in the nation's best interest. Debt repayment before splurges jk

The government is setting themselves up for an electoral backlash if the promise and and can't delliver, which is quite possible given the state of the world economy. They might be overstating the rosy picture and deluding even themselves!

Future Stealth Taxes is how they do it. Infact it's how ALL politicians do it. If any tax cuts or expenses are not being funded by borrowing then they are being funded by the public in the sneakiest forms they can muster.

12
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I listened to the interview, but didn't hear anything on government infrastructure spending, other than an oblique reference to cycle paths, which I assumed to be in tourist spots in any case.
The deal seems to be:
The government encourages immigrants and tourists in but then insists that the ratepayers, primarily of Auckland, pay for all the infrastructure and or the social cost of hour long commutes and general gridlock. It is not clear to me that transport or housing will work well based on that model, and the gridlock will get worse. Even if Aucklanders are expected to pony up for transport developments, I don't see any remotely bold planning at government level. Indeed they had to be dragged very reluctantly to allow the inner city rail proposal to finally get started. Yet that will need to only be a small part of a much bigger solution.

.

You have a car Stephen?or two? You know the costs to run them, and you also know the tax revenue and levies we pay also. THAT is your answer as to why NZ has such a poor public transport network. Government after government has made the simple task of just moving around a fantastic tax rort on all of us. And it goes deeper, from freight & courier costs to supermarket food prices.
The loser? Us, the winners? corporations (some of them monopolies and duopolies) and our OWN treacherous government who's actually worked against us like we are the 'enemy' for decades.

If we had say ...a French farmers backbone then maybe our country would not function this way.

And as for infrastructural spending, these guys are all about running stuff down to ground so they can sell it for a song to private's. If not sell then remove the public component of the service and privatize that. Any public service left just becomes a 'front' or 'shell' service, nice shiny PR, fancy logo's outside new buildings and nothing for the actual taxpayer until they are on his/her knee's completely bankrupt and spent, even then...their tax paying spouse/partner is used against them (even though we all pay taxes as individuals).

Sad sad country....unless you're a landlord! Then there's benefits YOU can claim galore! like WFF and the Accommodation Benefit! yay

Ohh, and mental illness brought about by all this open prison living we are forced into? No real help for you there either. Infact they won't even let your own family state the word....."suicide" anywhere in public.

Unfortunately the time for solutions was decades ago. Everything has been pushed way past the point of there being any solutions.

The Key government strategy is to now drive society and the environment straight off the cliff, and make short-term profits from doing so.

This will be a lot more apparent a few months from now.

Are you saying John Lennon lied to us?

If Tax cuts are on the table maybe JK could reverse one of his many broken promises:
http://www.stuff.co.nz/national/politics/3311679/Key-no-GST-rise-video-e...

This would help those on lower incomes with a number of other positive including the possibility of reducing the cost of rent (and overall cost of the state paying said rent to landlords) and overall cost of new homes built NZ.

This supposedly fiscally aware and competent government have borrowed hand over fist and sold our assets while increasing GST.

Meanwhile the corporate welfare theme continues; I'm sure you can think of others:
http://www.stuff.co.nz/business/industries/79957502/secret-nevis-thrille...

http://www.stuff.co.nz/business/industries/64385758/auckland-council-cou...

Oh and maybe we could work a bit harder to close down those international tax loopholes & havens.

Have to go and lie down now for a few Zs...Starting to see images of frozen globe shaped objects in very hot places...

So, the campaign for Election 2017 has started ?

He wants to deal with bracket creep? Then the creep in the bracket (jk) should step down
3 Billion of our money to spend?hmmm...maybe 100 000 x $30 000 housing deposits for the most needy, on non-tradable housing purchases?

Subsidies just push prices up.

It's all just about getting votes, not whats good for the country, these guys are government by polls.
How about sorting out google, facebook, amazon etc, and get 1.5 billion or so in tax a year they should be paying?
Or sorting out the likes of compass, who have massive loans back to their parent company, so the net effect is they pay basically no tax in NZ, even though their revenue is in the hundreds of millions.
Or did those companies donate to the national party, so we won't worry about them?
Sort those guys out then we'll be in better shape for tax cuts

13
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- New Zealand families sleeping in cars
- Massive infrastructure issues in Auckland
- Government debt at record levels and barely a balanced budget
- Huge problems with boomer superannuation funding coming

But this failure of a human thinks buying votes is better than working for the good of New Zealand (and that money will go straight into the property market).

**** this guy and the people who vote for him.

Why oh why does this parasite continue to poll so well?

No credible opposition; that's why

Great an extra 100 bucks payrise each week to help save for the deposit for the extra 100,000 the average auckland house has increased in the last 12 months....what a joker

All talk no action government ....

Election bribes. That's the problem 3 years is too short. Governments like national will never get anything done. Worried about next election the day they start.

3 billion,in Auckland city, debt against housing is increasing at 1.7 billion a week, 3 billion isn't even two weeks new debt just in AKL.

I hate these electioneering budgets. We should be paying down debt...especially if we aspire to be the "Switzerland of the South"...whatever that means.

There was a spellcheck screw-up, and he actually meant "Swaziland of the South".

I don't like the National government, but since you're giving me a $20 tax cut per month then I'm going to vote for you. Oh wait, you're going to raise GST to 19% the year after the election, oh wait EHHHHHHHHHHHHHH

"No tax cuts for you lot, we've got to look after those over-indebted Aucklanders first. They are much more important than you." It's the Helen and Michael show all over again.

The Clark-Key government has been in office for nearly 20 years, nothing has really changed.