More than half of Kiwis want a tax cut, more than a third don’t, new poll reveals

Labour has already ruled out tax cuts, National says it will provide them if elected. Photo / NZME

More than half of voters believe the time is ripe for tax cuts, while more than a third disagree, according to a 1News Kantar Public poll.

The poll, conducted from May 20 to May 24, asked; “Is now the right time to introduce tax cuts in New Zealand?”

Fifty-two per cent of the 1002 respondents replied “yes,” 35 per cent said “no,” while the remaining respondents remained silent.

Prime Minister Chris Hipkins has ruled out any possibility of introducing a capital gains tax, wealth tax or any other significant tax changes before the election.

So it wasn’t a surprise when tax cuts were not included in this year’s Budget announced earlier this month, Finance Minister Grant Robertson said he preferred that his “kids were safe” and decided to put the money elsewhere.

Earlier this week, Hipkins told Newstalk ZB he would “eventually” look at adjusting tax brackets, but that doing so now would be so inflationary it would eat up any increase in people’s incomes.

He warned that bracket adjustments would need to be large in order to deliver a meaningful amount of money to people - and large tax cuts would be inflationary.

“You have to make really big adjustments to tax brackets in order for people to get a meaningful amount.

“More than $2-$3 a week you’re talking about [a] big cost to Government in terms of revenue foregone,” Hipkins said.

He said such cuts would probably increase inflation to the extent it would erode the gains made from any tax cut.

“The inflationary environment that would stimulate would mean people would face rising costs more than any money they would get from their tax cuts,” Hipkins said.

National, dubbed the “Coalition of cuts” by Labour, has continuously said it will include tax cuts in its policies if elected.

However, earlier this week an economist warned the main policy in the National Party’s tax plan will be $8.2 billion over the four-year forecast period when the most recent forecasts from Treasury are factored in.

In order to account for inflation between the time Labour took office in 2017 and the end of 2021, National’s major tax strategy would raise the income tax thresholds. Less tax will be paid by individuals because of the higher brackets.

But the price tag is high. The expense of raising such brackets rises as wage inflation moves more people into higher income levels.

The new figure takes into account Treasury’s most recent wage forecasts, which lift the cost of the plan to $1.94b in the 2024/25 year, the first Budget in which the policy could be implemented. That makes it substantially more expensive than the $1.66b cost of the first plan, which National said should have been implemented in 2022.

“National’s costing appears to be based on 2021 wage data. The new analysis, based on Treasury’s Budget 2023 wage growth data, conservatively calculates the cost of the bracket adjustments at $1.94b in 2024/25, rising to $2.14b in 2027/2028,” said CTU economist Craig Renney, who ran the numbers.