Labour leader warns of ‘single child tax’
A nasty fish-hook in the Government’s Family Income package may leave up to 20,000 families with one child, worse off than couples with no children, Labour says.
Leader Andrew Little is calling it the ‘‘single child tax’’, and says this is the consequence of a more aggressive abatement rate introduced to ensure the package was targeted to those who needed it.
While those families would still see a net positive gain to their weekly pay packet, ones with a single child would get a smaller piece of the pie.
‘‘A one-child family with one parent earning $59,000 a year actually gets $830 a year less in National’s package than the same family with no child. How is that a family package?’’
Kiwi families earning between $44,000 and $56,000 were most affected. Under the Government’s package, unveiled by Finance Minster Steven Joyce last week, a singleearner family on $55,000 a year would be $20.38 a week better off.
But a single-earner family on the same income, with one child under 16, would only get an extra $14.18 a week.
That did not include any further income boost a family might receive from the Accommodation Supplement. The Government had effectively passed over a large portion of middle New Zealand, Little said.
‘‘Whenever you’re putting these packages together, there’s always a complexity about it. But I’d be surprised if they understood there is 20,000 odd single-child families that will now be worse off – but that’s the reality. ‘‘
Joyce said those families still gained overall, and Labour was failing to see the big picture.
‘‘The abatement changes mean they don’t get as much from the Working For Families part of the package but they gain more from other parts of the package, in particular the tax changes.’’
They could also gain from accommodation supplement changes, he said.
‘‘One of the aims of the Family Incomes package is to focus Working For Families on lower-income families and that middle-income families are less dependent on Working For Families and keep more of what they earn through the tax system. This is an example of that occurring.’’