Labour to National: rethink tax cuts

Labour Leader Phil Goff today called on the National Government to rethink its 1 April tax cuts.

“John Key holds his Jobs Summit tomorrow and he has the opportunity to show New Zealanders that he is serious about keeping them in work and protecting them from the worst of the global economic crisis.

“He can do this by admitting that his tax cuts are not the best way to stimulate our faltering economy. Mr Key needs to make sure that his tax cuts are focused on those who need them the most.

“Tax cuts targeted to low and middle income families and low income earners have the most immediate, biggest and most cost-effective impact on stimulating demand and keeping businesses and jobs going.

“The world has changed markedly since National campaigned last year on introducing these tax cuts. The outlook for our economy has worsened significantly and job losses are forecast to increase,” Phil Goff said.

“The Government’s approach to handling the crisis needs to keep up with this changing environment. As Air New Zealand chief executive Rob Fyfe said in the New Zealand Herald yesterday, the crisis is so big “all bets are off…. We need to stimulate this economy and there are more effective ways than broad-brushed tax cuts”.

“Mr Fyfe’s comments represent a growing consensus that National’s tax cuts will not deliver the fiscal stimulus the New Zealand economy needs to keep New Zealanders in work.

“Time and again National will tell us that it only has a limited amount of money at its disposal to deal with the economic crisis. That is why we need that money going to the areas where we will get most out of it. National’s tax cuts will not do this.

“Lower income earners, who miss out under National’s plans, would spend that money making ends meet. It makes economic sense and it is also the fairest solution. Low income earners are the most vulnerable to a recession.

“Labour also believes that funding the retrofit of our older and colder homes should also be a priority together with reinstating the research and development tax credits, and the Fast Forward Fund.

“Other priorities should be a boost to training and apprenticeships so that New Zealand does not face a job skills shortage crisis at the end of the recession and more transitional support to those made redundant.

“Labour stands ready to support the National Government changing its stance on these tax cuts,” Phil Goff said.