Prime Minister John Key said one of the choices that today’s Budget surplus would present was the possibility his party could promise tax cuts in the campaign for the September 20 election.
He even suggested any tax cuts could be aimed at middle New Zealand which “pays a fair bit of tax and often doesn’t get a lot in return”.
Key and English promised ‘tax cuts for middle New Zealand’ in 2008 but went back on that promise as soon as they were elected and in 2010 they bought in tax cuts for high income earners and increased GST for everyone, the great ‘fiscally neutral’ tax switch that cost a billion dollars a year and boosted growth to a staggering 1%. So I’m not going to get too excited here.
Also, when English stopped paying into the superannuation fund back in 2009 – a decision Treasury estimates will have cost the country about $50 billion dollars by 2050 – he promised that payments into the fund would resume when the books got back into surplus. So which takes priority: tax cuts or payments to the super fund? My guess is that Key thinks the idea of paying into the super fund is absurd. Where’s the political benefit to him if some future politician has more money to fund superannuation in a couple decades time? So it’s gonna be tax cuts.