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Source: Q+A -
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The government has achieved a good balance of fairness between lower and higher incomes in its tax changes outlined in the Budget, Bill English says.
Questioned by ONE News political editor Guyon Espiner, the Finance Minister said the government is concerned about the gap between rich and poor but admitted the Budget will not alter the current divide.
English told TVNZ's Q+A programme this morning that they have achieved a shift in the tax system without making the problem significantly worse. He says very high income earners are likely to pay more GST and they tend to carry the burden of the extension of property taxes. And he says tax loopholes have been shut down while the top tax rate has been aligned with trust and company rates.
Only about half of the wealthiest New Zealanders have been paying the top tax rate, according to Inland Revenue.
English says the changes aim to produce incentives across the economy and he believes the biggest impact will be from the large proportion of New Zealand earners with a new marginal tax rate of 17.5%, rather than the handful of people at the top end.
"In the long run it's about lifting economic growth so they can all get ahead, not just about one off cash on the day," says English.
The government believes the tax changes will give lower and middle income families stronger incentives to save and get ahead, and better opportunities to get into home ownership.
"It is the ability to move up through the income scale that in the end deals with the fundamental problem of inequity," English says.
And the Finance Minister believes enforcement of existing rules, particularly around property and entitlements for social assistance, is going to yield significant revenue.
Challenged about fears the tax relief will be eroded by the increase in GST and inflation, English says this was factored in to the whole package.
"The reason tax makes a difference is because it's pervasive right across the economy, it affects everybody."
And it is English's personal view that cuts in early childhood funding will not need to be passed on to parents. He says early childhood centres get three times as much government money now as five years ago.
The Finance Minister reiterated that there will be no asset sales during the current term but he would not be drawn on whether National is looking at partial floats for state companies if they are re-elected.
"If that is going to change we will let electorate know and campaign on it," he says.
English says the government's immediate focus is on better managing the $200 billion worth of assets it owns.
What is much more important than whether "a few assets at the edge are sold or not" is the government showing proper stewardship of public assets paid for out of PAYE and people's power bills, he says.
"If we can get 10% better performance out of that, that is worth a lot to the economy."
