Nats’ tax plans face review

Party leader keen to rethink policy following biggest single rise for official cash rate

National Party leader Christopher Luxon says everything in its tax policy but indexed tax brackets is now under review, after yesterday’s cash rate rise.

The Reserve Bank yesterday lifted the official cash rate by 75 basis points to 4.25 per cent.

This is its highest level since December 2008, the biggest single rise since the OCR was established in 1999 and the ninth consecutive rise.

Luxon yesterday said National would review its tax policy as a result.

It would still index tax brackets but other promises including cutting the top tax rate would be reassessed.

A major focus of National’s tax policy is the indexing of tax thresholds to inflation.

Speaking after Question Time yesterday, Luxon said that the Reserve Bank’s actions were clearly necessary, but things had changed with the rising levels of inflation and the threat of ongoing recession.

“We are committing to indexing our tax thresholds. It’s practical and pragmatic,” Luxon said.

“Let’s get really sobering about the reality of this, interest rates are going to continue to rise because inflation is stubbornly high and we are now heading to recession.”

He confirmed all other aspects of National’s tax plan were on the table.

This would include promised cuts to what the party says is seven new taxes introduced by Labour: The regional fuel tax, a $1000-a-year payment for properties along the Auckland light rail corridor, the bright line test extension, interest deductibility changes, the income insurance scheme, the clean car discount, and removing the 39 per cent top tax rate.

“We would like to offer people tax relief, but when I look ahead if I think about the 39 per cent tax rate in particular that’s something I really want to think about because . . . in this environment, the situation has changed big time. Big time,” he said.

Let’s get really sobering about the reality of this, interest rates are going to continue to rise because inflation is stubbornly high. Christopher Luxon, National Party leader

“We’ve been crystal-clear to say the economic conditions will determine what we can achieve in our first term in government and so we will take stock of where we sit today and we will revisit where we are.”

National’s finance spokesperson Nicola Willis said her interpretation of the Reserve Bank’s monetary policy statement was a message to Minister of Finance Grant Robertson: “Every single year you’ve blown your spending limit. Please for the good of New Zealanders don’t do that again next year — this country can’t afford it.”

“This is the time for him to be answering the question ‘do I really need all of those extra backroom public servants that I hired, do I really need to be spending $2 billion a year on consultants. Is this the time to be forking out millions in bribes to councils to push through Three Waters reform?” she said. — RNZ