On paper the National Party’s new tax plan is not particularly radical. It looks like a workable way to deliver some cash back to middle New Zealand next year.
It looks, in the grand scheme, quite prudent. It also looks like a vote-winner.
The tax cuts will be inflationary, despite National finance spokeswoman Nicola Willis declaring the policy won’t be.
Any time you put more money into the back pockets of consumers, you are adding an inflationary impulse to the economy.
National has literally called the cuts a “Back Pocket Boost”. That sounds pretty stimulatory to me.
I assume what Willis means is that the package, in its entirety, is not inflationary.
When we look at the tax cuts offset against the disinflationary impulse of the other spending cuts, it adds up to inflation-neutral.
We should assume, based on the proposed spending cuts, that if National is in power there will be a fair few bureaucrats and consultants with less money in their back pockets by this time next year.
Regardless, the timing of the tax cuts - in July next year, not April - is effectively an acknowledgement that we need to wait a few more months for inflation to abate before giving consumers any more reason to spend.
If there is a flaw in the policy, it is that there look to be some heroic assumptions on the revenue side.
But that may not be so politically difficult for National to deal with when it comes to the crunch.
For example, reopening the New Zealand residential sector to foreign buyers for the upper end of the market (houses above $2 million) and taxing them for the privilege doesn’t seem like a bad compromise.
It could attract some foreign currency, fill a hole in the Crown accounts and should be fairly marginal with regards to inflating house prices for first-home buyers.
The problem - when we look around the world right now - is not that we should expect a massive influx of foreign buyers.
It is that we shouldn’t.
Chinese buyers - who were infamously targeted by Labour in 2015 - may or may not have been the main drivers of a foreign buyer boom through that property cycle.
But China is currently grappling with one of the biggest property investment downturns in the nation’s history.
Snapping up a $2m house in Te Atatū is hardly likely on Chinese consumers’ investment horizon.
Right now just convincing them to come here on holiday and buy more cheese looks like hard work.
Successfully chasing down the online gambling industry also looks like a tough sell. Will we have IRD officers knocking on doors in the Cayman Islands?
Perhaps any extra tax we do get back off them could be reinvested on virtual poker to hit the revenue target.
The reality is that all plans to reduce tax right now are risky - including Labour’s plans to remove GST from fresh and frozen fruit and vegetables.
The economy is deteriorating. The Chinese economic slump threatens to accelerate that slowdown, with prices for New Zealand’s export commodities falling fast.
The Crown tax take will almost certainly continue to dwindle over the next 12 months.
Whoever wins in October faces a Herculean task to balance the books based on pre-election promises.
But that won’t be as difficult a political situation for a new centre-right government as it would be for an incumbent centre-left government.
National - in coalition with Act and with some in its own ranks prepared to move further right - can simply cut spending harder and point back to the legacy of the last Government.
Unless of course, (as per the increasingly gloomy outlook of some economists) we’re so deep into recession that we actually need the fiscal stimulus by then.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.