John Key has outlined National's broad fiscal policy, promising to phase in tax cuts which will eventually be worth $3.9 billion per annum in 2008. How are they planning to pay for it? Cutting the Kiwisaver scheme, which would have helped kiwis save for a first home (or retirement), for one. Reversing the indexing of tax brackets to inflation, for two. Most laughably, there's "a full baseline review of all spending, with a view to cutting low-quality spending" - unspecified savings, a billion dollars worth, they know the money's there, they just don't know where (or else they don't want to say). Then there's running lower surpluses - meaning lower capital spending and a consequent running down of infrastructure - and of course borrowing. Yes, having spent the last twenty years trying to kick that habit, National - the self-proclaimed "party of fiscal responsibility" - is promising to once again live beyond our means. Wonderful.
There's no detail on the tax changes - we'll have to wait till Monday for that - so we can't see exactly who will benefit. But given National's obsession with the top and company tax rates, the answer is pretty obvious: the rich. They are planning to slash services and programs that help the poor, run down our schools and hospitals, and burden the next generation with debt so they can throw money at the wealthy again. We rejected this in 1999, and we should reject it again on September 17th.
Could the econometrists out there please explain to readers what the tax cuts of both the parties engaged in this "my cut is bigger than your cut" battle will do to mortgage interest rates? In principle, if exact numbers are a bit too hazy right now. Many thanks.
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