Dave Gee: Life from Right Field

Self-proclaimed socialist Finance Minister Michael Cullen has announced plans to cut personal taxes over three years, if Labour is re-elected. Speaking to the Auckland Chamber of Commerce this afternoon, he acknowledged it was time for tax cuts.

Cullen said Labour would phase in tax cuts over a three year period, with the possibility of further cuts beyond that. However, he downplayed expectations that the tax cuts would be substantial.

However, some commentators are questioning whether Cullen can be trusted to deliver on his promises. His previous election-year offer of tax cuts (in the infamous "chewing gum budget") was subsequently cancelled, along with the promise to future-proof income tax thresholds against inflation.

In 2000, when Labour introduced the tax tax rate of 39%, the party promised it would apply to just the top 5% of taxpayers. However, over 12% of New Zealand workers are now paying that top tax rate.


Financial blogger Sheryl Sutherland says Cullen has collected an extra $1.7 billion from taxpayers. The bulk has come from 150,000 people who have moved into the top tax bracket. She calculates to restore the 39c tax rate to the top 5% of taxpayers (as originally promised), the threshold needs to be increased to $79,000.

Last year, the Centre for Independent Studies found that real taxes for many kiwis (taking into account inflation) have increased by 22.6% since 2000.

Their research revealed someone on the average wage of $36,000 in 2000, would now need to be earning $43,000 to maintain an equivalent income. Unfortunately, they are instead payng an extra $2,400 a year in taxes because of Labour's refusal to honour its original promise.

THEY SAID IT... A few memorable quotes from our honest and dependable leaders...

* “Tax cuts are a path to inequality... They are the promises of a visionless and intellectually bankrupt people” – Helen Clark, Labour Party conference 2000

* “People who advocate large tax cuts off the back of large surpluses should be taken out and quietly drowned” – Michael Cullen, February 2006

* “$8.5 million surplus and still no tax cuts? So? What’s the connection between the two? None, right!” – Michael Cullen to TV One's Guyon Espiner, September 2006

* “We just don't believe in tax cuts - it's against our fundamental philosophy - after all we are socialists and proud of it.” — Michael Cullen

* Hat tip: Whale Oil