Labour, Greens split over tax move

The Budget tax cut plan has split the Opposition, with Labour voting against the changes and the Greens and NZ First voting in favour.

From next April, the moves, which lift the bottom two tax thresholds, will give $10.70 a week to those earning more than $22,000, and $20.38 to those on more than $52,000 a year.

But the simultaneous axing of a $10 a week credit for low earners with no dependents means some will only be better off by $1 a week, leading Labour leader Andrew Little to dub it the ‘‘dollar Bill Budget’’.

He said the Greens were an independent party and could do what they wanted.

Labour and the Greens have a memorandum of understanding as well as an agreement on a joint set of Budget responsibility rules (BRRS).

He said not too much should be read into the two parties voting in opposite ways on the tax package.

‘‘They’ve made their political judgment on the basis of this Budget at this time. But both our parties have pretty clear agreement about the level of discipline required in fiscal management if we have the privilege of forming a government.’’

Labour took a different view on whether the package was well targeted and well prioritised.

‘‘If we have the privilege of forming government there is a level of jointness in our platforms – and we make those decisions more jointly and in a more connected way than we do when we are two parties in opposition, albeit working closely together,’’ Little said.

‘‘You can vote different ways and that (BRRS) document retains its integrity.’’

Greens co-leader Metiria Turei has described their decision as a ‘‘line call’’ to back a move that would put some cash in people’s back pockets.

The family tax credit was the only credit that beneficiaries got ‘‘and they are the ones that need it the most’’.

‘‘I won’t oppose more support for the families that have always had the least and need the most.’’

Turei said the new abatement rates ‘‘were terrible and the tax cuts were ridiculous but the family tax credit, small as it is, will help’’.

The Greens had no choice but to also vote for the threshold rate change because of the way the bill was structured.

Little would not be drawn on the detail of Labour’s plans for tax thresholds, but said the Budget package was poorly targeted.

‘‘This is not about giving benefits to low and middle income earners. It still favours top income earners.’’

Five times as much was going into the tax part of the package than the Working for Families element.

He said Labour would support changes to Working for Families and the accommodation supplement increases.

However, it was concerned at the accelerated abatement rate, which goes up from 22.5 per cent to 25 per cent, and the lower abatement threshold of $35,000 down from $36,350, that applied to Working for Families payments.

Labour would look again at its Best Start policy, to support families on poverty, in light of the Budget changes to Working for Families.

Little said Finance Minister Steven Joyce’s first Budget was clearly an election-year document.

‘‘Tax cuts can only be seen as an election bribe and one heavily targeted at the well-off.’’

Upper income earners got the most benefit and the poorest, earning under $14,000, get nothing from the tax package. Property speculators on $200,000 got 20 times what their minimum wage tenants received.

He and Prime Minister Bill English did not need a $1000-a-year tax cut, which they would get from the package.

But it was an opportunity missed to invest more in things like infrastructure and schools.

‘‘When you use Budgets for sugar hits it means you miss the chance to make other more important changes.’’