Cullen Should Tell The Whole Story

Labour's finance spokesperson Dr Cullen cannot justify his tax rises for 150,000 hard-working New Zealanders by comparing our tax rates to those overseas, Treasurer Rt Hon Bill Birch said today.

"He should be honest about his figures.

"Dr Cullen has said that those earning $60,000 would be getting off lightly by only having to pay 39 cents of every extra dollar (the marginal tax rate) under Labour 's tax rises when compared to overseas taxes.

"However, he didn't tell the full story.

"For example, it is true that the top marginal tax rate in the United
States is 39.6% - but that applies when someone's income is over NZ$480,000.

"It is also true that the top marginal tax rate in Japan is 50% - but that applies when income is over NZ$475,000.

International Tax Rate Comparisons at $60,000

"To look at it another way, someone earning NZ$60,000 would be paying 28% marginal tax in the US, 24% in the UK, and 20% in Japan."

Mr Birch said it was difficult to make international comparisons because of the intricacies of individual country's tax systems.

"But Dr Cullen wants to try and create the impression that the "rich" - anyone earning over $60,000 a year - are somehow cheating the rest of New Zealand by not handing over more and more of their income to the state.

"It is clear is that the New Zealand Labour party is turning its back on the low-tax policies the rest of the world, even the parties of the left, recognise as essential for growth, jobs and better living standards.

"Tony Blair got elected in the UK on a campaign of no tax rises, and the newly elected Social Democratic party in Germany announced tax cuts to help the average earner and make Germany more competitive.

"Japan's initial response to its recession was to cut taxes to stimulate growth.

"The Conservatives in Australia got elected on a tax package incorporating a gst and income tax cuts.

"But Michael Cullen, Helen Clark and Jim Anderton want to take more money from working New Zealand.

"People in New Zealand earning more than $38,000 a year currently pay one third of every extra dollar they earn in income tax. That is a burden we should be trying to lighten for working New Zealand, not make worse like Labour and the Alliance intend."

(Source:OECD publication, "The Tax/Benefit Position of Employees", 1997)