Ryan Bridge: How much cash will we get back from tax cuts?

How much cash will we get back from tax cuts?

Nicola Willis will soon an announcement about their timing and potential value, if they get back to the Treasury benches.

The good news out of yesterday's PREFU is that the books are out of structural deficit this year.

Ryan Bridge: I wouldn't hold your breath for tax cuts

Tax cuts are back on the campaign agenda.

Nicola Willis dropped a wee hint to the BusinessNZ election conference yesterday.

Bracket creep is hurting workers – as wages increase and you creep into a higher tax bracket, you pay more marginal tax. That's not fair.

David Farrar: Monetary policy needs mates

The NZ Initiative has a research note out on how fiscal policy needs to work with monetary policy. They comment:

This analysis does not dispute that the RBNZ’s high interest rates were the proximate cause of the downturn. However, it argues the Bank had little choice. It was confronted with the insidious threat of inflation expectations breaking free from their anchor, a development that would risk a return to the deficit-spending stagflation of the 1970s and early 1980s. After all, following December 2023 changes, the Monetary Policy Committee’s single operational objective is price stability – 1-3 percent, with a focus on the 2 percent midpoint.

Mike’s Minute: We take the tax cuts as a rare win

Welcome to tax cut day.

It's been a while since we've been able to say that. The tax cuts arrive to an uncertain debate as to what exactly they do.

Do they add to inflation? Do they change lives to the extent that they are material to most people? Did they get lost a bit in what has been a tsunami of change and upheaval since the new Government arrived?

David Farrar: Labour want your tax cuts

Newshub reports:

Labour is asking Kiwis to hand over their tax relief to the party after heavily campaigning against the cuts.

In an email to its constituents, Labour continued to slam the size of the tax cuts as “just a few dollars”, before asking for donations.

Cam Slater: At Last, Taxpayers Get Some Tax Relief!

Nicola Willis has delivered and saved her job after promising tax cuts during the election or she would resign. For the first time in a decade, we finally have a government that is going to take less from our pockets.

David Farrar: Joyce on tax cuts

Steven Joyce writes:

If you believe most of the commentariat, and apparently a majority of economists, the Government’s much-signalled and much-promised tax cuts are a very bad thing. Yet according to a Taxpayers’ Union poll, 74 per cent of New Zealanders surveyed want tax thresholds adjusted for inflation. In other words, a tax cut. How has the public managed to get so out of step with the thought leaders in our society?

Andrew Dickens: Tax Cuts - I'd argue that neither side is looking at the full picture

Well... Has there been an earth tremor in the ideological universe. Are some capitalists wavering and beginning to argue for a pause to tax cuts and even a capital gains tax?

One of my favourite reads is the business section of the Weekend Herald on a Saturday. It has the best articles and opinion pieces - but this week was especially interesting.

Heather du Plessis Allan: Steven Joyce is right, tax cuts are the way to go

I'm gonna back up Steven Joyce on something that he’s said today.  

He's written a piece for the Herald arguing for why we need tax cuts - which is an argument at the moment. 

Because you have commentators and economists lining up saying Nicola Willis is doing the wrong thing by giving us tax relief. Because she can’t afford it, because she’s got a deficit and therefore she's basically borrowing for tax cuts.

David Farrar: Hipkins wrong

Newshub reports:

Labour Party leader Chris Hipkins has stood by increasing the public service workforce during his time in government, saying it’s been proportionate to the growth in population.

The Coalition Government has directed the public services to cut costs by between 6.5 and 7.5 percent to help reduce annual public service spending by $1.5 billion. It’s resulted in thousands of jobs proposed to be axed across the sector.

Bruce Cotterill: A matter of trust - this government promised us tax cuts so they must deliver them

There is plenty of noise coming from commentators and observers alike, suggesting that the Government should abandon their tax reduction programme.

They make a fair point. The Government has given us some dark financial and economic news over the last six months as they have sought to get to the bottom of the financial woes they inherited. We have been living well and truly outside our means and since they were sworn in in November, Prime Minister Christopher Luxon, Finance Minister Nicola Willis and co have tried to be upfront about the state of the books in an effort to have Kiwis understand that we’ve run out of financial lifelines.

Dr Eric Crampton: In a structural deficit, the only real tax cut is a spending cut

This week's column in the Stuff papers. A snippet:

Tabarrok warned that America had two political parties – “the Tax and Spenders and the No-Tax and Spenders” – and neither was fiscally conservative. In the two decades after Tabarrok’s warning, the federal government never achieved a balanced budget. America’s federal deficit ranged from 1.1% of GDP to over 14% of GDP and gross federal debt doubled, rising from 60% of GDP to 120% of GDP.

Professor Robert MacCulloch: Can NZ's Budgetary Problems be Blamed on our Voting System, MMP?

Why is National getting so many bad headlines for its budget cuts? Part of the answer may lie in MMP. Before the election, the Nats had prepared a fully costed budget. One could, of course, argue about whether its foreign (residential) buyers property tax, for example, would raise as much as the Nats estimated. The media featured endless stories on that topic, which turned out to be a waste of time. Why? Because in the MMP negotiations, NZ First didn't want to allow any foreign buyers into that market, so the tax on them was scuttled.

Heather du Plessis-Allan: We need to make sure politicians deliver on their promises

National is making noises that sound an awful lot like they might not deliver the full tax cuts in July like they promised.

Finance Minster Nicola Willis was on the radio this morning, she was asked about it and she replied that she still intended to roll out the tax cuts in July- but it was subject to Cabinet discussions, so she could not give a cast-iron guarantee it would happen.

Ooh, she's playing with fire.

David Farrar: Aussies paying less tax under Labour than Kiwis under National

Anthony Albenese has just announced amended tax cuts in Australia. His package is different to his promise to keep the tax cuts of the previous Government (and he now has to take electoral consequences of that), but he is still delivering significant tax cuts that again exposes how much more taxed we are in new zealand.

Someone earning $70,000 in Australia will pay $11,788 in tax compared to $14,020 in NZ. So that's an average rate of 16.8% compared to 20.0%.

Brian Easton: The State Of The Economy - January 2024

The New Zealand economy is struggling; the new government will struggle to implement its economic promises.

There is not a great deal of difference in Treasury’s projected GDP growth patterns between the May 2023 Budget Economic and Fiscal Update (BEFU) and the December 2023 Half Yearly Economic and Fiscal Update (HYEFU). But there are some other important underlying changes which suggest the incoming government has a tougher task than it expected. (I am skipping the September 2023 pre-election update because there is a lot of noise in the series, and the longer perspective gives a clearer account of any changes.)

Damien Grant: The new Government has a once in a generation opportunity to lower taxes

In politics, as in life, we never have as much time as we think. Days tick into weeks, months, years.

Suddenly you find yourself in your late fifties wondering if you have done enough to avoid penury when the working years grind to a halt.

The time to act is now. No matter the task at hand; begin immediately. Waiting for the perfect moment is procrastination that leads to paralysis and regret.

Max Salmon: New Zealand's fiscal constraints

The incoming government has been entrenched in drawn-out coalition negotiations.

Across the table from National Party leader Christopher Luxon sit the leaders of two minor parties, both basking in the now-fading glow of recent electoral successes, eagerly eyeing their slices of the economic pie. Unfortunately, this pie has seen better days. The crust is stale, and the filling is sparse.

Point of Order: Critics say incoming Finance Minister should go slow on mini-budget

But isn’t that what the country is crying out for?

As the party leaders of National, ACT and NZ First make progress on the framework of the government they are shaping, incoming Finance Minister Nicola Willis has to get to grips with rebalancing the country’s finances and at the same time pull together a mini-budget to present before Xmas.

It wouldn’t be easy for an experienced minister but for one new to the job, the question is: will she get it right?

Peter Wilson: Week in Politics - Promises, polls and attack ads

The main parties launch their campaigns and Labour's attack ads draw an angry response, National's tax cuts are challenged, the policy deluge continues and is this "the most negative campaign in New Zealand history?"

Labour and National launched their campaigns and there was a marked difference in style.