National promises $4.5bn in tax cuts in economic and tax policy

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National’s promising a short-term package of tax cuts – worth more than $4.5 billion – to kick start the economy.

Watch the announcement here:

Leader Judith Collins and finance spokesperson Paul Goldsmith announced the policy in Wellington this morning.

The changes would be made by significant increases to income tax thresholds, but would only be in place for 16 months, from December this year until March 2022.

Other key aspects of its economic plan are a revised debt repayment target, more generous tax write-offs for new business assets, and a tighter budget for new spending.

National says it would achieve that by a more disciplined approach including suspending Super Fund contributions, and scrapping spending on initiatives like tertiary fees free and KiwiBuild.

The announcement follows the release of the Treasury’s analysis of the government books ahead of the election in the pre-election economic and fiscal update on Wednesday, and official GDP figures yesterday that showed New Zealand in its first recession since 2010 – and the deepest fall in living memory.

The party has already promised no new taxes in the coming term, as well as cutting income tax and paying back debt at a faster rate than Labour, while also investing in infrastructure and public services.

It also plans to set up a Border Protection Agency to help manage Covid-19.

In the lead-up to today’s announcement, Labour finance spokesperson Grant Robertson said National’s economic stance was in a “Bermuda triangle” of trying to achieve three incompatible things at once.

“They both want to increase spending, reduce revenue and dramatically reduce debt. You can’t do all of those things at once credibly and I think their plan is lost somewhere in that triangle.”

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