Something meaty to argue about
Finally, voters have a choice. Until yesterday, a common complaint about the 2020 election campaignwas that the two big parties were hugging close to the centre line and playing it safe, while relying strongly on cults of personality.
Both Labour and National’s TV ads featured directto-camera addresses by their leaders, and asked voters if they want more of the same or more of prettymuch the same.
Political veterans, including former United Future leader Peter Dunne, bemoaned the absence of a contest of ideas, arguing that ‘‘seldom, in recent years, have the twomain parties seemed to be so much on the same page’’. That might seem ironic, coming from such a dedicated centrist.
The stalemate finally broke yesterday and now we really do have a contest of ideas, if temporary tax cuts for higher earners can indeed be described as a fresh idea. It could equally be seen as a desperate measure or the last roll of the dice.
Critics of National’s promised temporary tax cuts have pointed out that leader Judith Collins reversed a previous position. It was only six weeks ago that Collins told Stuff that no tax cuts were planned. That was itself a reversal of former leader Simon Bridges’ position earlier in 2020.
It is easy to be cynical about the sudden appearance of this policy from a party that is polling well below expectations. If nothing else works, smash the glass and deploy the emergency tax cuts.
Could it succeed? Possibly. But the proposed tax cuts are not distributed equally. Had stimulus in a recession really been the aim, then we might see larger tax cuts for those on low incomes, who would be more likely to spend the extramoney they have rather than save it or pay off mortgages. Instead, under National’s plan, those earning $50,000 would get a reduction of 8.4 per cent, while those earning $90,000 would get a 14.6 per cent cut.
To put it anotherway, those earning $50,000would keep an extra $893 over 16 months, but those earning less than twice as much would keep an extra $4026. The policywould be likely to widen inequality.
Thosewho are more likely to be struggling in a post-Covid-19 world are not the ones who would benefit most from this policy.
The rhetoric that says tax cuts inspire and reward ‘‘hard-working Kiwis’’ overlooks the fact that many of the essential workers we praised during the Covid-19 lockdown will not be much better off if National’s tax cuts come to pass.
The economic policy that promises tax cuts would also reduce the government’s operating allowances to between 60 and 75 per cent of what Labour has promised to spend over the next three years.
It would mean $7.3 billion less spent on public services over the next four years.
However, tax thresholds have not changed for a long time, meaning a larger proportion of workers is now on the top tax rate. Acase could be made for lifting the thresholds permanently, rather than the short-term shift proposed by National.
It remains to be seenwhether tax cuts are the allpowerful political weapon they appeared to bewhen John Key was primeminister. Covid-19 has changed the picture of social responsibility, or the sense of what we owe to each other, and has added to uncertainty.
But we can definitely agree that there are deeper differences on offer now, and something meaty to argue about before October 17.
... now we really do have a contest of ideas.