Labour Party finance spokesman David Cunliffe. Photo / Mark Mitchell
Opinion
Budget 2010 is a tax swindle, a lost opportunity and a massive broken promise to New Zealanders.
It rewards the wealthiest, but swindles the middle class by gobbling up their small change tax switch in the highest (5.9%) inflation in decades.
Most Kiwis' tax cuts will be wiped out by
inflation before they even get to the checkout.
By the Government's own figures an average wage earner will be $30 a week worse off after inflation and a person on $70,000 will be $45 a week worse off.
The tax cuts are unfair; a third goes to the top five percent and 15 percent goes to the top one percent. People in the middle and bottom will go backwards after inflation.
The upper income tax cuts are unaffordable. The Government is borrowing an extra $450m next year, and a billion over four years.
This Budget therefore breaks a string of hollow promises:
* not to raise GST
* to leave the "vast majority" of Kiwis better off - most won't be after inflation and rent taxes
* to be fiscally neutral: the Budget borrows $450m next year to fund upper income tax cuts
* to return to prefunding superannuation when in surplus (no prefunding until 2019, surplus 2016)
* to compensate pensioners and Working for Families recipients for GST (this a one-off, not indexed)
* to maintain health and education: wrong - health is some $300m per-annum short of keeping up. Education is some $200m per-annum short; including a savage $120m cut to early childhood education.
* to rebalance the property/business tax divide: this is underwhelming - building depreciation is partially taxed, but there is no ring fencing of losses; and the changes to LAQC and PIE rules are minor.
Overall the Budget fails both tests of fairness and growing jobs and incomes.
Lower and middle income earners are left behind while the top end reaps a windfall.
The old, the young, the sick and frail are left worse off.
The Government is borrowing to favour its mates, once again.
It is a tax swindle, a lost opportunity and a massive broken promise.
