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News for today
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Marc
News for today
Labour has turned the election's No 1 issue on its head, offering significant "tax relief" to National's heartland – middle and upper-income New Zealand.
In what could be a defining moment in the election campaign, Labour has abandoned claims the country cannot afford tax cuts and gazumped National, pledging to spend $1.34 billion on targeted tax rebates to families earning as much as $110,000 a year.
It is planning to fund the plan from a windfall tax take and latest Treasury projections that show the surplus topping $8b and the economy continuing to grow strongly.
Labour has sat on its plans since receiving the latest economic good news almost a month ago.
It has a new series of television advertisements ready to roll, timed to coincide with National's long-awaited tax-cuts announcement on Monday.
Today, National is due to unveil its overall spending plans, which will give the public their first glimpse of the size of its tax cuts.
It is understood National plans to spend about $3b on tax cuts over the next four years.
Finance spokesman John Key admitted last night that National would not be able to match the sort of increases in take-home pay Labour was planning for some large families.
Unveiling what he described as "extraordinarily significant gains for a very wide range of middle-income families", Finance Minister Michael Cullen said a revamped Working for Families scheme would benefit two-thirds of all households.
Under the plan, the average income for families earning between $45,000 and $70,000 will rise by $80 a week.
A family with three young children on a household income of $65,000 will receive an income boost of $110 a week.
Two-child families earning under $40,000 will pay no tax at all.
Labour's policy offers nothing for couples without children and little for higher-income earners with only one child.
It also means a taxpayer on $52,000 with no children will have the same take-home pay as someone earning $40,000 with two children.
Prime Minister Helen Clark said reducing child poverty was always Labour's priority, and paying all taxpayers the same amount spread the rebate too thinly.
National said Labour had simply extended the welfare driftnet to middle-income New Zealand.
"This shows just how out of touch Labour is. Mainstream New Zealanders want tax relief, not an extension of welfare," Key said. "Labour's message to voters is, have low aspirations and larger families."
Key said National would not review its tax package in the light of Labour's plans. "National has a responsible plan to lower taxes and provide the right incentives for all working Kiwis to get ahead, not just the chosen few targeted by Labour for their votes."
In the Pre-Election Economic and Fiscal Update, released yesterday, the Treasury forecasts that $1.58b will be available for governments to save or spend between now and 2009.
The rosy accounts show a surplus this year – before capital spending and the Cullen super fund is factored in – of $8.3b, up $500 million on forecasts because of a continued record tax take.
The Government is forecast to rake in an additional $2.8b in tax by 2009.
But the Treasury is warning that the economy is becoming unbalanced, with a growing current account deficit, continuing high levels of domestic consumption and inflation likely to remain at the top end of the Reserve Bank's 3 per cent maximum.
Cullen denied Labour was ignoring Treasury advice by spending almost all of the additional $1.58b, claiming its new spending was "back-ended" – meaning most of the cost did not kick in for a further two years.
The Greens and United Future welcomed Labour's tax pledge, although the Greens said it was unfortunate that the children of beneficiaries would miss out.
New Zealand First attacked the policy, dubbing it the "Working for Labour" package.
"Labour is treating taxpayer money as its own personal slush fund in trying to buy this election," leader Winston Peters said.
ACT leader Rodney Hide said Labour had been spooked by the public's overwhelming support for tax cuts.
In what could be a defining moment in the election campaign, Labour has abandoned claims the country cannot afford tax cuts and gazumped National, pledging to spend $1.34 billion on targeted tax rebates to families earning as much as $110,000 a year.
It is planning to fund the plan from a windfall tax take and latest Treasury projections that show the surplus topping $8b and the economy continuing to grow strongly.
Labour has sat on its plans since receiving the latest economic good news almost a month ago.
It has a new series of television advertisements ready to roll, timed to coincide with National's long-awaited tax-cuts announcement on Monday.
Today, National is due to unveil its overall spending plans, which will give the public their first glimpse of the size of its tax cuts.
It is understood National plans to spend about $3b on tax cuts over the next four years.
Finance spokesman John Key admitted last night that National would not be able to match the sort of increases in take-home pay Labour was planning for some large families.
Unveiling what he described as "extraordinarily significant gains for a very wide range of middle-income families", Finance Minister Michael Cullen said a revamped Working for Families scheme would benefit two-thirds of all households.
Under the plan, the average income for families earning between $45,000 and $70,000 will rise by $80 a week.
A family with three young children on a household income of $65,000 will receive an income boost of $110 a week.
Two-child families earning under $40,000 will pay no tax at all.
Labour's policy offers nothing for couples without children and little for higher-income earners with only one child.
It also means a taxpayer on $52,000 with no children will have the same take-home pay as someone earning $40,000 with two children.
Prime Minister Helen Clark said reducing child poverty was always Labour's priority, and paying all taxpayers the same amount spread the rebate too thinly.
National said Labour had simply extended the welfare driftnet to middle-income New Zealand.
"This shows just how out of touch Labour is. Mainstream New Zealanders want tax relief, not an extension of welfare," Key said. "Labour's message to voters is, have low aspirations and larger families."
Key said National would not review its tax package in the light of Labour's plans. "National has a responsible plan to lower taxes and provide the right incentives for all working Kiwis to get ahead, not just the chosen few targeted by Labour for their votes."
In the Pre-Election Economic and Fiscal Update, released yesterday, the Treasury forecasts that $1.58b will be available for governments to save or spend between now and 2009.
The rosy accounts show a surplus this year – before capital spending and the Cullen super fund is factored in – of $8.3b, up $500 million on forecasts because of a continued record tax take.
The Government is forecast to rake in an additional $2.8b in tax by 2009.
But the Treasury is warning that the economy is becoming unbalanced, with a growing current account deficit, continuing high levels of domestic consumption and inflation likely to remain at the top end of the Reserve Bank's 3 per cent maximum.
Cullen denied Labour was ignoring Treasury advice by spending almost all of the additional $1.58b, claiming its new spending was "back-ended" – meaning most of the cost did not kick in for a further two years.
The Greens and United Future welcomed Labour's tax pledge, although the Greens said it was unfortunate that the children of beneficiaries would miss out.
New Zealand First attacked the policy, dubbing it the "Working for Labour" package.
"Labour is treating taxpayer money as its own personal slush fund in trying to buy this election," leader Winston Peters said.
ACT leader Rodney Hide said Labour had been spooked by the public's overwhelming support for tax cuts.
Cheers
Marc