A National government would link income tax brackets to inflation, ensuring taxes are adjusted every three years in line with the cost of living, National leader Simon Bridges says.
This 'rolling tax relief' would allow New Zealanders to keep more of what they earn, Mr Bridges said in his State of the Nation speech in Christchurch today.
“New Zealanders’ incomes are struggling to keep up with the rising cost of living because this Government is imposing more red tape and taxes,” Mr Bridges said.
Over the next four years, New Zealanders will be paying almost $10,000 more per household in tax than they would have been under National, he said.
"The Government is taking more than it needs, only to waste billions on bad spending."
“On top of that, by 2022 New Zealanders on the average wage will move into the top tax bracket. That’s not right or fair. So in our first term National will fix that by indexing tax thresholds to inflation," the National leader said.
A National government would amend the Income Tax Act so tax thresholds are adjusted every three years in line with the cost of living.
That would mean that within a year after every election, Treasury will advise the Government on how much the thresholds should be adjusted for inflation, he said.
“This would prevent New Zealanders from moving into higher tax brackets even when their income isn’t keeping up with the rising cost of living. It would ensure New Zealanders keep more of what they earn to stay on top of rising costs of living such as higher prices for necessities like petrol, rent and electricity."
Assuming inflation of two per cent, someone on the average wage would be $430 a year better off after the first adjustment, $900 after the second and $1,400 after the third, Mr Bridges said.
A family with two earners - for example, one earning $80,000 and the other $40,000 - would be $600 better off a year after the first adjustment, about $1,300 after the second and $1,900 by the third.
The first adjustment would prevent Kiwis from paying an extra $650 million a year in tax based on today’s estimates, Mr Bridges said.
"We can afford that by managing the books prudently and spending wisely."
National would include a veto clause so the Government of the day could withhold the changes in the rare circumstances there is good reason to, Mr Bridges said.
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