Wednesday, June 15, 2005
Some other facts for the economic debate
Jordan on his blog raised some facts for the economic debate. He pretty much pulled them from a Michael Cullen speech.
As a matter of fairness I respond here.
Rodney gave this recent speech. Notable things are:
- For someone on the average wage of $41,300 a year, these tax cuts mean an extra $2,000 a year, almost $40 a week. This is the same as getting a 7% pay rise under the current tax scale.
- Flattening and reducing the income tax scale were the main recommendations of the McLeod Tax Review the Labour Government commissioned in 2001. Cullen paid a million dollars for the review, which confirmed the wisdom of a lower, flatter tax structure, but he threw the report in the bin.
- The fiscal cost of the package is $5.7 billion a year. That’s $1.7 billion less than the forecast surplus.
- Cullen has introduced over 30 taxes and/or levies since taking office.
- The Labour Government is getting richer. Its net worth under Cullen is forecast to increase from $35.5 billion to $63.1 billion over the next five years. That’s a yearly increase of 12.2 per cent, $5.5 billion a year.
- At the same time, Cullen is increasing total government spending from $53 billion in 2004 to $73 billion by 2009. That’s a $4 billion a year increase.
- In the last four years, government spending has increased by a third and it’s forecast to increase another 38 per cent during the next five years.
It is quite obvious that Cullen’s government is rich, yet middle income NZ is poor. The gaps aren't closing even if some poverty indicators may be looking a little better. This goes to show that the average family is no better off now than when Labour came to power. Their income is up. But all the gains have been taken in tax and higher prices (petrol as a recent example).
Cullen’s other excuse for not cutting taxes is that tax cuts would push up interest rates. It’s actually the tax hikes that have put up interest rates through greater government spending. The OECD recently confirmed that.
Yes Jordan you are right. We do get to chose this election. It's a shame kiwis don't get to choose with their own money.
As a matter of fairness I respond here.
Rodney gave this recent speech. Notable things are:
- For someone on the average wage of $41,300 a year, these tax cuts mean an extra $2,000 a year, almost $40 a week. This is the same as getting a 7% pay rise under the current tax scale.
- Flattening and reducing the income tax scale were the main recommendations of the McLeod Tax Review the Labour Government commissioned in 2001. Cullen paid a million dollars for the review, which confirmed the wisdom of a lower, flatter tax structure, but he threw the report in the bin.
- The fiscal cost of the package is $5.7 billion a year. That’s $1.7 billion less than the forecast surplus.
- Cullen has introduced over 30 taxes and/or levies since taking office.
- The Labour Government is getting richer. Its net worth under Cullen is forecast to increase from $35.5 billion to $63.1 billion over the next five years. That’s a yearly increase of 12.2 per cent, $5.5 billion a year.
- At the same time, Cullen is increasing total government spending from $53 billion in 2004 to $73 billion by 2009. That’s a $4 billion a year increase.
- In the last four years, government spending has increased by a third and it’s forecast to increase another 38 per cent during the next five years.
It is quite obvious that Cullen’s government is rich, yet middle income NZ is poor. The gaps aren't closing even if some poverty indicators may be looking a little better. This goes to show that the average family is no better off now than when Labour came to power. Their income is up. But all the gains have been taken in tax and higher prices (petrol as a recent example).
Cullen’s other excuse for not cutting taxes is that tax cuts would push up interest rates. It’s actually the tax hikes that have put up interest rates through greater government spending. The OECD recently confirmed that.
Yes Jordan you are right. We do get to chose this election. It's a shame kiwis don't get to choose with their own money.
