Phil Goff, Labour Party leader, announced on February 22nd that a two week protest bus-tour will be launched on February 28th to fight the possibility of a the GST rate being raised to 15 percent. He claimed that the tour’s aim was to visit New Zealand communities and “to show them just how unfair John Key’s plans to hike GST are.” The protest plan also includes several visits to local community groups like Grey Power, Citizen’s Advice Bureau, and any local budgeting services.

While introducing his protest-bus idea, Phil Goff claimed that the National Party had not campaigned with the promise that it would raise GST, and the “…Labour [Party] is going to campaign against it.” He went on to say that a GST increase is unfair and would hurt middle and low income earners across the country, while not delivering for families.

Opposition party members have already commented on the proposed bus tour, noting that while Phil Goff is protesting the GST rise he has not yet stated that his party would lower it if it came to power in the next election. New Zealand Prime Minister has stated that he is not concerned with the tour, and believes that most New Zealanders are reserving their opinions on the increase until they see the entire tax reform package in May.

Photo by Policy Network

On the 12^th of September at a Labour Party conference in Rotorua, Phill Goff, Labour Party leader vowed that if Labour were to be re-elected there would be no rise in personal taxation, GST or introduction of Capital Gains tax.

The concession on the capital gains tax remains that it applies exclusively to first homes and not investment and rental properties. It was also emphasized that any possible tax cuts will be prioritized and aimed towards low-income families. He described the party’s future focus as catering to average New Zealand households.

Further, Phil Goff made statements regarding a reform in the perception of the economy. He is encouraged by New Zealand’s recovery and that of its trading partners, like China. The relatively low level of governmental borrowing warrants some level of optimism for the future. He made reference to previous Labour party leadership and decisions, and apologized to the New Zealand public for mistakes made.

Since the announcement of their tax plan, the National Party has been receiving a lot of criticism from both the public and groups like the New Zealand Manufacturers and Exporters Association, along with business relying on their research and development tax credit.

Paul Hutchinson, in a talk in Palmerton North, said that the research funded by the tax credit is not always of the highest standard, and that in the end, the tax credit has a “variable effect” and that firms would often reassign some of their previously followed activities as “R&D” to attain a credit. He went on to say that National plans to make sure that investment in science is of the highest level. The National Party plans to achieve this by putting $315 million in funding to universities and Crown Research.

Paul Hutchinson also revealed that National plans to abolish the current Fast Forward Fund for agricultural research and replace it with incentives for agricultural innovation.

Since the announcement of their tax plan, the National Party has been receiving a lot of criticism from both the public and groups like the New Zealand Manufacturers and Exporters Association, along with business relying on their research and development tax credit.

Paul Hutchinson, in a talk in Palmerton North, said that the research funded by the tax credit is not always of the highest standard, and that in the end, the tax credit has a “variable effect” and that firms would often reassign some of their previously followed activities as “R&D” to attain a credit. He went on to say that National plans to make sure that investment in science is of the highest level. The National Party plans to achieve this by putting $315 million in funding to universities and Crown Research.

Paul Hutchinson also revealed that National plans to abolish the current Fast Forward Fund for agricultural research and replace it with incentives for agricultural innovation.

The National Party’s tax cut proposal is underpinned with two main points, one being that it is much more beneficial for some income bands, and the other is that it is somewhat easier on the New Zealand budget than that of the Labour Party.

The savings in the New Zealand budget, while still maintaining tax cuts is possible due to National’s decision to scale back the required Kiwisaver contribution from 4% to 2%. While this enables employees to take more of their pay cheque home, it also frees up the Government’s mandatory contribution. Similarly the mandatory employer contribution is scaled to 2%. The National Party Tax Cut plan is also doing away with the current Government’s 15% tax credit for business doing research and development.

The National Part proposes to have three rounds of tax cuts, each on the 1st of April, in 2009, 2010 and 2011. For $0 to $14,000 earners, the rate will stay at 12.5% throughout. $14,001 – $50,000 earners will see a rate of 21% in 2009, 2010 and a drop to 20% in 2011. The $50,001 – $70,000 band will see 33% throughout the three periods. Lastly, the $70,001 and over earners will be at 38% post the 2009 cuts and at 37% post 2010 and 2011.

Those on a salary of over $24,000 who are not receiving any other benefit will now be eligible for a new tax rebate, entitled the Independent Earners rebate. Between $24,000 and $44,00 will receive a rebate of $10 per week until the 2010 cut date, where it will rise to $15. Each dollar of income above $44,000 will see a decrease of 13 cents from the rebate, effectively cutting it off at $48,000 and later at $50,000 in 2010.