Relief for the financially stressed should look at discretionary spending, not focus on tax rates, New Zealand First leader Winston Peters says.
On a day in which Finance Minister Michael Cullen is expected to announce tax relief in the budget, Mr Peters said tax cuts were not the
whole answer.
How much money people had left to spend after they had paid tax was important, he told Radio New Zealand.
"What's left for you to spend is what the real issue should be," he said.
"When you are buying the vitals of life, the essentials of life, you have no discretionary spending."
Mr Peters yesterday called for a tax-free threshold for up to $5200 to be set and for GST to be reduced to 10 per cent over three years.
He today pointed out that while some countries had higher tax than New Zealand, their citizens still had more money left over for discretionary spending.
GST of 12.5 per cent had a "very profound effect" on discretionary spending "especially for those who are very averagely incomed - it's very unfair in that context".
Mr Peters said budgets over the past nine years had not provided enough support for exporters, around whom the economy was built.
Export industry had to be given a tax structure that made it worth risking offshore ventures, he said.
Mr Peters told the Auckland Grey Power Association annual meeting yesterday his party had secured $530 million over the past two budgets for the eldercare sector.
He said international finance prices, oil prices and food shortages raising prices needed to be addressed.
Had NZ First been in a position to deliver the budget it would set a tax-free threshold at $5200 of income earned.
For superannuitants that would give an extra $21 a week and those of other rates would get up to $14.
"We would also begin an incremental reduction in the level of the Goods and Services Tax on all products," Mr Peters said.
"Over three years the party would reduce the tax back to 10 per cent," the initial rate set before it was raised to 12 per cent.
The policy would cost $4.5 billion.
- NZPA
