Editorial: When assessing tax promises, consider the overall impact

National leader Christopher Luxon speaking during the Adjournment Debate in Parliament, Wellington. Photo / Mark Mitchell

Editorial

Voters need a calculator handy to work out whether they would really be better or worse off when assessing the scrum of party promises in this election.

Amid the headline offerings are also less obvious plans to take things away. And who benefits the most?

It’s best to consider the overall impact of a party’s policies rather than just focusing on one or two things.

And while it’s natural to consider what it would mean personally, there’s also the overall balance of policies to think about. What will the impacts be for society and the country?

From a political point of view, National’s $14.6 billion tax plan over four years seemed shrewd.

Income tax cuts are a big carrot to dangle when people have been struggling and the economy is sluggish. The simple thought of getting extra may trump all others at voting time.

There were adjustments to income tax, new taxes and spending cuts. Some potential attack lines appeared to be deflected with a focus on taxing foreigners, and reducing spending on consultants and contractors.

But there were also obvious question marks, including whether the proposed new revenue streams to pay for the offerings will be adequate.

Another basic one is whether income tax cuts in the current economic environment is too much of a risk, considering the need to bring inflation down. Other parties argue for more taxation revenue from people who can afford it.

The package, which includes completely new taxes and various tax credits, would have to be ready by next July.

The idea of the “squeezed middle’' implies that the bottom and the top get less attention.

And individuals on $42,000 a year or less would only get a small flat white worth of tax relief - $4 a fortnight. They would also seem more likely to be disadvantaged by the removal of public transport subsidies.

The plan would work better for “middle’' people already doing better on pay. National’s advertising focuses on a hypothetical young couple with a child on two $75,000 incomes which it says would be “better off by $185 a fortnight under National”.

That and the help for landlords in the form of restoring interest deductibility for rental properties over the next few years leave National open to accusations of looking after its own likely supporters. But with both there’s an aspiration appeal to voters seeking to improve their situations.

Would a 15 per cent tax on foreign buyers of houses over $2 million actually be effective? It’s predicted to raise $740m per year with about 2000 sales annually from a smallish pool of housing, but buyers from some nations would be exempt. There are tax agreements with dozens of countries.

That tax and user-pays immigration visa levies would be interesting schemes to watch considering New Zealand’s existing profile as a climate bolthole could grow in coming years. The immigration move could make it harder to compete for talent.

National’s public service cuts would be much more severe than what Labour has talked about. A tax on offshore gambling would seem hard to administer. Using funds from the ETS more generally will mean less for climate mitigation and resilience. The regional fuel tax which would be scrapped is used for Auckland’s eastern busway and other upgrades.

National’s plan is one of a number of tax proposals for voters to consider. The Green Party wants a wealth tax and to make changes to income tax. Act is after a simple two income tax rate system. Labour says it would take GST from fruit and vegetables as part of a longer list of cost of living measures. Te Pati Māori is seeking a wealth tax and GST taken from all food.

Voters need to assess the positive and the less realistic claims about them.