Deputy Leader of the Labour Party and Finance Minister, Dr Michael Cullen, on Monday set out the party’s economic manifesto as it bids to retain power at next month’s general election, although its glibly entitled plan ‘productivity, sustainability and a fair share of growth for all’ was disappointingly short on tax initiatives.
Cullen said that the Labour Party has this year announced and legislated for a programme of tax cuts that by the third year will deliver NZD50 a week or more to around 50% of all households, and he boldly announced that now is the time for steps to be taken towards "greater prosperity and greater fairness."
"New Zealanders are looking for a vision for growth and investment, and a plan to make it happen,” he added.
Labour is promising to lift New Zealand into the top half of the OECD rankings in terms of per capita GDP, but it seems that the government has no plans to reduce its ranking in the OECD tax league. While a 3% corporate tax cut was put into effect on April 1, 2008, at 30% New Zealand’s corporate tax rate is still among the highest of the thirty OECD members.
However, Cullen revealed that the government has begun work on an economic stimulus package to be implemented if “the projected impacts of the global economic downturn on the New Zealand economy remain as they appear to be at the moment.”
He also announced that the interest rate on underpayments for provisional tax will be reduced to the same level as the rate of interest paid by the Inland Revenue Department on overpayments for the period from January 15, 2009 to May 2010. However, the Commissioner of Inland Revenue will have the discretion to increase the interest rate back to the normal level if he is satisfied that there has been a deliberate attempt to underpay tax.
Cullen also pledged that Labour would not respond to the more difficult fiscal environment by cutting expenditure.
The General Election will be held on November 8, 2008.
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