Tax cuts and justice

National is dangling tax cuts before the voters again, while yet again refusing to give details. It is obviously going to give some kind of cut, since it would be suicide to withdraw the offer after teasing about it for so long. But tax cuts are not as big a gift for a National Government as many think.

Bill English and John Key before him have promised to target the cuts at the low and middleincome earner. This is an attempt to avoid the traditional charge that National is just ‘‘rewarding its rich mates’’. But the problem about altering the tax brackets is that, as one observer puts it, the benefits tend to ‘‘cascade upwards’’. The high earners get the biggest benefit.

This then opens National to the time-honoured game of calculating how much a Cabinet minister will gain from the tax cuts that the ministers have collectively given. Now National’’s real motive in giving tax cuts might indeed be to reward the wealthy, since that is its base and because the Right believes in doing so. ACT’s David Seymour is at least honest about this, calling on the Government to make the tax cuts now, before the election rather than after it.

But here National’s real interests might collide with its rhetoric about the poor and the’’squeezed middle’’. If National was serious about helping the poor, and given the level of noise about child poverty it should be, it could deliver tax cuts in a more targeted way through Working for Families, as antipoverty campaigners say.

John Key used to say that a tax cut had to be a minimum $3 billion or $30 a week if it was to have any impact. But this has to be weighed against Steven Joyce’s list of four priorities for government spending, including better infrastructure and government services and reducing debt.

National’s play for increasing the age of eligibility for NZ Super is an attempt to take seriously the demands of the future, a constituency that tends to be neglected. As Al Gore once put it, the future tends to whisper while the present shouts. But it would be absurd for National to hand out tax cuts while refusing to restore contributions to the Cullen Fund.

If it really believes in making NZ Super sustainable, it must start feeding the fund.

The forecast surpluses are large and no doubt National will argue that there is enough to fund all that is needed. This is essentially what Labour seems to be saying, since it has promised not to increase taxes (except on the ‘‘bright line’’ de facto capital gains tax on houses).

It says it can fund its very ambitious housing targets and child poverty promises without raising taxes, though it certainly says there is no room for tax cuts as well. Labour is trying, as always, to avoid the ‘‘tax and spend’’ label (one version of which caused it some trouble at the last election).

So there’s a genuine debate in this election year about tax, which is welcome.

But it is mood, rather than the consideration of issues, which decides elections, and right now there seems little mood for a big change in the nation’s direction.

Tax cuts are not as big a gift for National as many think.