Labour stakes electoral fortune over tax policy
I have always encouraged our people to focus on the large interest of the New Zealand society within which our interests as Indian New Zealanders and our ensuing generations, will be advanced.
In election year, this means subjecting major new policy initiatives to intense scrutiny to determine if these are good for the country and its future.
Labour recently released its tax policy.
This policy stands in sharp contrast to the tax policies of the current Government and provides a real choice for electors on November 26.
Labour’s political philosophy is based on fairness and its tax policy is designed to return fairness to our tax system, which is missing in the current regime.
There are several elements to Labour’s tax policy.
First, it addresses the extra burden of tax for low and middle-income earners by providing for the first $5000 of income for everyone to be tax-free, called, the ‘Tax Free Zone.’ This provides immediate relief for low and middle-income earners struggling under the constant effects of increasing prices on a wide range of essential items.
There will be no Goods and Service Tax (GST) on fresh fruits and vegetables to encourage healthy eating and provide relief from soaring prices.
The policy also introduces a Capital Gains Tax (CGT).
The CGT will be non-retrospective and will not apply to the family home.
Currently all workers pay tax on every dollar they earn. However if you gained income from the profits you make from selling property, shares, rights and options, there is absolutely no tax at all.
CGT exists in every OECD country except New Zealand, Switzerland and Turkey.
The proposed tax is set at a low rate of 15% of net gain. This means the seller gets to keep 85% of the gains. This takes accounts of the effects of inflation and other factors.
This Tax will only apply to gains made after a given date, which is likely to be from April 1, 2013. As an extra safeguard, up to $250,000 of the gain made by small businesses owned by people for 15 years, those over 55 years old and those who wish to sell for retirement.
The package also increases the top tax rate to 39 cents per Dollar for incomes over $150,000. This will apply to about 2% of the taxpayers, part of the group that received the largest tax cuts in 2009.
These tax changes will have two major positive effects on New Zealand.
Government-owned assets such as the Clyde Dam, Air New Zealand and power companies, will not be sold but maintained as Crown assets for all New Zealanders.
Once we have sold these income-earning strategic businesses, they will end up under foreign ownership and will be driven by the need to make huge profits.
Labour believes that these assets accrue good dividends, even as they provide services to New Zealanders.
The final advantage of this Tax Policy is that New Zealand will be able to pay off its debts, without having to tamper with State assets.
All of us take responsibility for contributing to the cost of running our country and guaranteeing our children and grandchildren the best we can for their development. We do not confound the business sector from using our human resources with their capital to produce goods and services to benefit us all.
In such a society, we also guarantee the vulnerable, the weak and the dependent that we will take care of them on a temporary basis as befits their condition. Dr Rajen Prasad is Member of Parliament on Labour List and the Party’s spokesperson for Ethnic Affairs and Associate Spokesperson for Social Development. The above article does not reflect the views of Indian Newslink. We welcome the National Party to advance its opinion. Read related report on Page 6 of this issue.