New Zealand First leader Winston Peters launched his election campaign yesterday, promising lower taxes for all but the rich, although he didn't say by how much he'd like to reduce tax rates except for returning GST to 12.5%.
Peters also wants to tackle the issue of savings taxes - saying inflation ate into returns from term deposits, and then savers were taxed at their marginal rates on top of that, including the 'inflation component'.
Indexation for inflation was one of the ideas touted by the Savings Working Group in January for improving New Zealand's savings rates by making bank deposits more attractive to investors.
National is still looking at the idea, and says work on this was pushed back by the Christchurch earthquakes. See article: Government still eyeing savings tax break, but complexities and poor IRD systems stand in the way. Interest.co.nz understands Labour has no plans currently to look at indexation, although one MP said it could be something to be tackled in a second term, and once the books were back in surplus.
On the other side of the ledger, property investors who write off mortgage interest payments against their income for tax purposes would be hit by indexation, as they would only be able to write off the 'real' payment (once the interest rate is adjusted for inflation), rather than the nominal payment.
It seems Peters' only hope of returning to Parliament is through NZ First reaching the 5% threshold in the November 26 election, and only then if Labour is able to form a government, as PM John Key has ruled out working with him.
Yesterday Peters said that on November 26 New Zealand First wanted to double the 95,000 votes it received in the 2008 election, in which it received just over 4% of the general vote.
Encouragingly for Peters, the latest iPredict election snapshot last week showed Labour's Phil Goff could form a government with the Greens, Maori Party, New Zealand First (if it reached 5%), and the Mana Party (although Goff has ruled out working with Mana's Hone Harawira).
Even without Mana, Labour would be close to be able to form a government as the poll gap between it and National narrows.
Here's Peters yesterday:
We stand for a fair tax system, where everyone pays a fair share.
So we are going to rewrite and simplify NZ’s mangle of tax laws so that they are understandable, unavoidable, and fair. Everyone will pay their fair taxes. That means:
· Less personal tax
· Less company tax
· Less GST at 12.5 not 15%
· Removing double tax on savings
· Removing GST on rates
· Removing secondary tax
Over 90% will be better off.
It is not fair for a young person, with two jobs, stacking supermarket shelves all night to pay secondary tax while a very rich person with millions pays no tax.
It’s not fair that you pay tax on savings interest less than the inflation rate and then get slammed with tax on top of that. So inflation above 4%, interest less than 4% on which you pay 33% tax. Are you going forward or back?
GST on rates is a tax on a tax, that’s intellectual fraud, and we’re going to abolish it.
The multi-millionaires must pay their share. Warren Buffet and Sam Morgan, (Trade Me), believe that and so do we.
'Travel around the CBD faster rather than to the beach faster'
Meanwhile, Labour announced it would can the Puhoi to Wellsford 'holiday highway' in order to put NZ$1.2 billion toward an Auckland inner city rail link, if the Auckland City Council promised to pay the other NZ$1.2 billion required for the project.
“National’s spending of NZ$1.7 billion on a new gold-plated highway is fiscally irresponsible in these tough times," Phil Goff told supporters in Auckland.
“Labour supports the so-called ‘Operation Lifesaver’ improvements to the existing Puhoi to Wellsford road rather than the gold-plated option," he said.
“This alternative, which includes a Warkworth bypass, would fix the crash black spots and traffic bottlenecks at a cost of NZ$320 million, delivering most of the benefits more quickly and cheaply than building an entire new highway. The combined costs of ‘Operation Lifesaver’ and our contribution to the Auckland Rail Loop comes to NZ$1.6 billion, less than the NZ$1.7 billion Steven Joyce has already budgeted for the ‘holiday highway’.”
'It will increase Labour's borrowing'
Transport Minister Stephen Joyce attacked Labour's transport announcement, saying the policy would increase the government's borrowing requirement over the next four years, a claim Labour transport spokesman Shane Jones refuted.
"Construction funding for the upgrade of State Highway One north of Auckland is currently not scheduled to start until 2014/15 and construction would extend for eight years after that," Joyce said in a statement.
"For Labour to meet anything like the timetable that Auckland Mayor Len Brown is has set for the Auckland rail loop, Labour will need to borrow NZ$530 million over the next four years. That takes their extra borrowing to a new grand total of NZ$17.19 billion over the next four years, and we will update the Owe our Future website accordingly," Joyce said.
But Labour's Jones said Joyce's claim was wrong.
“Labour plans to fund half the rail link by cancelling National’s holiday highway north of Puhoi, but today Mr Joyce claimed that because construction funding for the highway is not scheduled to start until 2014/15, and construction will take eight years, that Labour will have to borrow NZ$530 million over four years to meet Auckland’s rail timetable," Jones said in a statement.
“That’s absolute nonsense, and Mr Joyce knows it,” Jones said.
“The truth is that the holiday highway money has not been allocated to specific years. It’s just pencilled in to come from the National Land Transport Fund at some point," he said.
“Labour may take money from that fund for the rail loop in different years than National would have done for the holiday highway, but the fact is that the timing of on-going transport projects drawing from the fund can be adjusted so that funding for the rail loop stays within the pool of money currently available in the fund."
(Updates with statements from Joyce and Jones, links to policy sections)