Tax cuts come with Green tinge

Greens co-leader Rod Donald says the party's policies would boost the right kinds of businesses. Picture / Glenn Jeffrey

While the major parties fight over tax, the Greens also have big plans that would leave more cash in all salary and wage earners' pockets.

"We're very clear, we want to shift tax off work and enterprise and onto waste and pollution," says the Greens' co-leader and finance spokesman Rod Donald.

He says that "tax shift" would involve making the first $5,000 earned tax-free - giving all workers $15 a week extra in the hand and helping business because of the resulting spending boost.

The lost revenue would be made up by introducing an excise tax on diesel and by making the carbon tax - scheduled for introduction in 2007 - higher than now planned.

"That's a quid pro quo for reducing income tax and helping business move to energy efficiency. There's a carrot and there's a stick.

"The increased carbon tax and the excise tax on diesel would pay for the first two of the three years of tax cuts and the third year would come from the other eco-taxes we'd bring in."

Donald is confident the Greens' figures on its tax proposal are robust, having been submitted to Treasury and analysed by independent researcher the New Zealand Institute for Economic Research.

The Greens also want to introduce a capital gains tax, "on all but the family home" to bring New Zealand into line with the rest of the OECD and shift investment away from speculation towards productive activity.

Donald dismisses the notion that the Greens are anti-business.

"That's a perception rather than the reality. I like to portray the Greens as being very business-friendly - but we're only friendly to businesses that are friendly to their staff and the environment."

He says if the Greens are returned to power in coalition with Labour they are "keen to work in partnership with businesses" to build a "strong, stable, self-reliant economy that is environmentally sustainable".

The Government could be doing more to ensure economic stability, including acting to prevent the New Zealand dollar becoming overvalued and harming exporters, domestic manufacturers and tourist operators. "It can gently encourage the Reserve Bank to use the mechanisms it's provided with to knock the top off the dollar."

Donald also believes a capital gains tax would help, by cooling the property market, giving the Reserve Bank room to lower interest rates.

The Greens are also concerned with New Zealand's swelling current account deficit. "We've got to start living within our means and the New Zealand economy cannot continue to mortgage itself."

They see part of the solution to that problem in encouraging New Zealanders to buy locally-made goods.

"If we make it locally we're employing local people; if we import products we're effectively exporting jobs. That involves sometimes some domestic protection when we face unfair competition."

The buy New Zealand-made campaign was part of the Greens' fair trade policy released last week, which also promised to oppose all free-trade deals with countries that do not uphold human rights.

"Good kiwi businesses shouldn't be forced to compete with sweat-shop imports where Third World workers, including young children, are paid less than a dollar an hour and forced to work in inhumane conditions."

Donald says the Greens have found an ally in the Canterbury Manufacturers Association, which has recently been a loud critic of the free-trade agenda.

On the subject of New Zealand's strained transport infrastructure, the Greens have a simple message: get freight off the roads and onto rail.

"Rail is the key to the future, especially electric rail as fuel costs rise.

"It's essential that the Government puts more resources into rail," says Donald.

The party believes recent petrol price hikes are a sign of things to come and the era of cheap oil is over.

"We've got to move rapidly otherwise we are going to get caught out if we haven't made the transformation to more sustainable transportation systems.

"The Government has a small window of opportunity to transform our economy into one that is less dependent on oil and for that matter into an economy that depletes, wastes resources, and pollutes less.

"In a nutshell we want to green the economy and that doesn't mean going without," says Donald.

"A green economy is all about being more productive and less wasteful, about making better and more durable products which last longer and consume less resources.

"It's a different approach and it involves real and satisfying jobs along the way."

Greens' key economic policies

* First $5,000 income tax-free
* Excise tax on diesel fuel
* Higher carbon taxes and new eco taxes
* Shift freight onto rail network
* Reserve Bank to intervene to control currency movements
* Buy New Zealand-made campaign
* Review free trade agenda and protect domestic manufacturing from "unfair" overseas competition