Budget’s tax cuts will go, says Labour

Labour is promising to scrap National’s Budget tax cut plan.

Instead it will funnel the cash into higher Working for Families payments and extra help for those with young children. It’s a package it says will deliver up to $48 a week extra to middle income families.

Labour would also reinstate the independent earners tax credit, which was dumped in the May Budget, but keeps in place National’s big boost to the accommodation supplement.

The flagship policy, announced by leader Andrew Little yesterday, aims to contrast Labour’s targeted help for middle income families with the extra cash the wealthier receive under National’s tax package.

It includes a winter energy payment for beneficiaries and superannuitants, announced by Labour on Monday. That would be paid between May and September and give $450 a year to a single person and $700 to a couple or a person with dependent children.

It comes as Labour was rocked by a new TVNZ poll on Monday that showed it falling to just 27 per cent against 47 per cent for National and the Greens and NZ First each on 11 per cent.

Little said the ‘‘targeted Families Package’’ would cost $890 million in 2018/19, but scrapping National’s tax cuts would free up $1.5 billion.

‘‘This creates more than $2b over four years of net savings. These savings, together with new spending to be set out in Labour’s Fiscal Plan, will be prioritised towards rebuilding New Zealand’s social foundations by investing in essential public services and our future infrastructure needs.’’

The package would give more than 70 per cent of families with children a bigger income boost than the Budget 2017 package.

‘‘By not spending $1.5b a year on tax cuts, Labour is able to do more for lower and middle income families and people in need, while investing in the priorities Kiwi families care about: housing, health, education and infrastructure,’’ Little said.

He said the September election was a clear choice between Labour’s priority of investing in services for those in need and boosting the incomes of low and middle income families against National’s priority of ’’an election tax bribe aimed at those at the top’’ which gave a disproportionate amount to the wealthiest households.

’’At a time when we have crises in mental health and housing, now is not the time for tax cuts.’’

Little said the energy payment would help a million people keep warm in winter. Together with grants for insulation and heating upgrades, it would help them avoid getting sick.

But National’s campaign manager, Finance Minister Steven Joyce, said Labour wanted to take $2.5b from families from next April, when National’s package takes effect, with a ‘‘pale imitation of the Budget’s Family Incomes package’’.

He said Labour planned to tax more with one hand and give a bit back with the other hand.

‘‘And in their desperation to avoid shifting tax thresholds, they’ve dreamt up an even more confusing array of new and old subsidies while taxing low and middle income people at ever higher rates as their wages grow.’’