2020 election: Judith Collins promises temporary ‘massive’ tax cuts in National’s economic plan

National is promising temporary “massive” tax cuts that it says will put $ 3,000 in the back pocket of average New Zealanders.

If elected, the party would raise the lower, middle and upper tax thresholds in an attempt to “allow the Kiwis to keep more than they earn.”

The total size of National’s plan is $ 10 billion over five years and will be paid for using the unallocated portion of the government’s Covid-19 fund and spending less money than a Labor government would over the same period.

But National has rolled back its earlier promise to reduce public debt to 30 percent of GDP by 2030, revealing today that the goal was “neither practical nor feasible.”

“Today, we face the largest economic recession the world has ever seen in living memory,” said national leader Judith Collins.

“To keep our economy going, New Zealanders need money to spend.”

That spending, according to party policy, will be driven largely by temporary tax cuts.

Under National, the lower tax threshold would rise from $ 14,000 to $ 20,000, the median level would increase from $ 48,000 to $ 64,000, and the upper tax threshold would rise from $ 70,000 to $ 90,000.

But these tax cuts are only temporary, taking effect on December 1 of this year and expiring on March 31, 2022.

Collins said the policy would put about $ 3,000 a year, about $ 50 a week, for middle-income people.

Last week, Labor promised it would create a new tax bracket: 39 percent for those who earn $ 180,000 a year.

But Collins said this morning that no country has taxed its way out of a recession, “and this is a big one that we’re in right now.”

Speaking to the media after the policy was released, Collins said New Zealanders face a “critical decision.”

“Grow our output, or tax and spend,” he said.

Collins had previously said he did not want to cut taxes, but said that after the second shutdown, he changed his mind.

“We believe that the economy can grow better than the government,” he said.

“Work cannot be balanced with books in 15 years; we will do it in eight.”

National finance spokesman Paul Goldsmith admitted the economy will need more stimulus, but said the way to do that would be to “ignite the economy” with National’s tax cut package.

He said the plan was “careful and balanced.”

Collins said this was not an electoral bribe, it was a package that restores “faith” to New Zealanders.

Goldsmith categorically ruled out any cuts to health, education and social services.

“We are not going to waste people’s money,” Collins said.

National estimates that the tax reduction policy would cost $ 4.7 billion during that 16-month period.

The party has also announced a policy that, according to financial spokesman Paul Goldsmith, would make companies “spend like crazy.”

That plan includes doubling the depreciation rate for companies that spend money on a new plan, more equipment, and any new machinery over the next year.

This advances the amount a company can claim in depreciation for new investments: it is expected to cost $ 1.7 billion over five years.

Meanwhile, National has promised that it will not cut any government spending on health, education or social development, while maintaining a spending cushion of $ 10.2 billion over the next four years to deal with “any future cost pressures.” .

National has been criticized by Labor in the past for its spending plans.

Finance spokesman Grant Robertson said National was stuck in a “Bermuda Triangle” where it wants to increase spending, reduce revenue and cut debt at the same time.

“You can’t do all those things at once, I think his plan gets lost somewhere in that triangle.”

National today admitted that its plan to reduce public debt to 30 percent of GDP by 2030 was unrealistic.

It now aims for 35 percent of GDP by 2034, its billions of dollars more in room for maneuver.

But National’s debt repayment plan still makes the party pay an additional $ 74 billion by 2034 than the current plan.

National has also predicted that, if he is in government, the books would be in surplus again by 2027.

According to the Pre-electoral Economic and Fiscal Update (Prefu) published yesterday, the Government would continue in deficit until at least 2034.

And while it has promised to spend $ 4 billion from the Covid-19 contingency fund on its temporary tax cuts plans, it has also promised that it will not spend $ 5 billion of the $ 14 billion unallocated so far.

This, according to Goldsmith, would help the party pay off the debt faster.