The Government should reconsider the delivery of their tax plan, as costs continue to escalate, said CTU Economist Craig Renney.
“Our analysis, using the latest data available from IRD and the Treasury, indicates that the cost of the income taxation changes is now half a billion dollars more than ³Ô¹ÏÍøÕ¾ indicated in its pre-election fiscal plan,” said Renney.
“All up, the modelling undertaken by the CTU shows that the cost of indexation is now likely to be $9.5bn over the next four years – against the $9bn budgeted by ³Ô¹ÏÍøÕ¾.
“The CTU analysis should alarm New Zealanders. It should also worry anyone who genuinely believes in value for money or in social investment.
“The analysis does not consider any additional increases caused by a rising population, which will add to the costs. Over the next four years, if the population rose at the same rate as in the pre-COVID period, this would likely add a further $300m to the cost of the income tax package.
“These costs are in addition to the many problems already being faced by the plan. $3bn for landlords – up $800m. $1.3bn missing from cutting welfare payments. Casino taxes bring in only $150m instead of $750m. The Government is relying on more than $1bn of tobacco taxes, and not delivering promised Working for Families changes, to prop up the package.
“Overall, the tax plan is now likely to be billions of dollars short of its overall revenue target. The only way left to fill the gap is through even deeper cuts to public services and public investment. Already we are seeing investment in areas like disability support, free school lunches and pay for the Police suffering, while landlords are guaranteed a $3bn payday.
“These are just part of many damaging consequences that New Zealanders are now seeing from the Government’s reckless commitment to tax cuts.
“The Budget Policy Statement is on Wednesday, and the Government should use the opportunity to show New Zealanders how it is going to make its plans work, and what it is going to cut to deliver them. Better still it could use that opportunity to abandon its plan and invest in all New Zealanders, not just a few,” said Renney.
| Costed | ³Ô¹ÏÍøÕ¾ Pre-Election Estimate | Revisions | Difference in cost |
| New Analysis | |||
| Income Taxation – Direct | $9bn | $9.5bn | $490m |
| Income Taxation – Population | $0 | $300m | $300m |
| Known Costings | |||
| Interest Deductions | $2.1bn | $2.9bn | $800m |
| Foreign Buyer Tax | $3bn | $0 | $3bn |
| Commercial Building Depreciation | $2.1bn | $2.3bn | -$200m |
| Gambling Tax | $716m | $151m | $565m |
| Brightline Adjustment | $200m | $202m | -$2m |
| Climate Dividend | $2.36bn | $2.05bn | $315m |
| Close Labour Programmes | $2.12bn | $2.62bn | -$497m |
| Benefit Indexation | $2.04bn | $670m | $1.37bn |
| Yet To be Costed | |||
| Immigration Savings | $492m | $492m | $0 |
| Public Service Cuts | $2.38bn | $2.38bn | $0 |
| Contractor Savings | $1.6bn | $1.6bn | $0 |
| Abandoned Policies | |||
| App Tax reversal | $206m | $0m | -$206m |
| Working for Families Changes | $1.4bn | $845m | -$555m |
| New Revenue | |||
| Tobacco Taxation | $0 | $1.5bn | $1.5bn |
| Total gap in tax plan | $3.83bn |
