John MacDonald: Tax cuts are the last thing we need from Act and National

The less money the Government has coming in from taxes, the less it has to spend. Photo / 123RF

OPINION

I'm not going to deny things are tight. Because they are. And if there's anyone out there who thinks things aren't tight in New Zealand right now, then I'll have some of what they're having.

Because it seems, doesn't it, that every time we go to the supermarket it's more expensive. Nip in to get a few things in between the big weekly shop, and a hundred bucks can disappear like that.

And so the news out yesterday that the Government's finances are in better shape than we had been led to believe, has fired up the inevitable calls for tax cuts.

The National and Act parties are saying there's now every reason to take on the cost of living crisis by cutting taxes. Labour and the Greens completely disagree, saying we're not out of the woods yet.

And we're not out of the woods, because it's not as if the figures out yesterday were a booming surplus. They're not.

We've still got a deficit - we're $9.7 billion in deficit. The good news is that we'd been told to expect about twice that. So it's bad, but just not as bad as people thought it would be.

So, why on earth do National and Act think that's a good enough reason to go cutting taxes, I'll never know.

National's finance spokeswoman Nicola Willis is saying that a decent finance minister would look at those numbers and see an opportunity to ease the tax burden on New Zealanders.

As she puts it, the Government needs to "just let Kiwis keep more of what they earn".

Which Willis would say because National is hanging its hat on tax cuts. In fact, so far it's hanging its hat, scarf and overcoat on tax cuts.

And just like I'm not denying that things are tight for people right now - I'm not going to deny that most people would love a bit more money in their pocket.

But now is not the time to do it.

Aside from the $9.7 billion deficit figure, another figure worth noting that came out yesterday is that the Government earned 10 per cent more through taxes because - overall - businesses have been more profitable and more people are in work.

So, technically - even though it doesn't feel like it - technically we're better off.

Act leader David Seymour is saying if the Government's benefited from more tax revenue, then taxpayers should benefit too and he's chiming in with National on the call for tax cuts.

But I couldn't disagree more with Seymour and Willis if I tried.

Because, just like you, I would love to hold on to more of the money I earn. With three teenagers, money flies out the door at our place like anything.

Yes, New Zealand is a great place to bring up kids. But it's also an expensive place to bring up kids.

But even if the idea of having a little bit more sounds good to me, I can't help but think of the opportunity cost that would come with tax cuts.

You don't need to be an economist to know that the less money the Government has coming in from taxes, the less it has to spend. And, let's face it if National and Act got their way and you and I got a tax cut - the extra amount we would get would be chicken feed compared to the cost to the country.

If you're frustrated with the state of the hospital system. Do you think that's going to have any hope of getting better if the Government has less money to spend?

Do you really think there'll be fewer ram raids happening if there's less money to fund the police force in this country?

Of course not. And National and Act can go on until they're blue in the face with their reassurances that tax cuts wouldn't mean a cut in services. Because I don't believe them - not for a minute.

This is why I think it would be nuts for the Government to cut taxes. And I completely disagree with National and Act on this one.

Yes, life is blimmin' hard on the financial front. But I think the benefit of you and me getting a tax cut would be outweighed big time by the Government having less money to spend on essential services that we all agree need more of.