Embarrassing About-face For Cullen Over Fringe Benefit Tax

  • Bill English

Labour's Finance spokesperson Dr Cullen had been forced into an embarrassing about-face over the fringe benefit tax, Revenue Minister Bill English said today.

"Dr Cullen has been forced to admit that Labour will have to raise the fringe benefit tax to match its planned top tax rate.

"This embarrassing about-face from Dr Cullen means people earning less than $60,000 will be affected by higher taxes. I've been asking "who's next?". Now we know it's middle income earners, not just Labour's rich people earning over $60,000.

"Until now Dr Cullen has refused to admit that Labour would increase any other taxes other than personal tax. This is in spite of the fact that the anomaly of not also increasing fringe benefit tax has been pointed out many times.

"Increasing fringe benefit tax will hit anyone who receives benefits such as a company car, sickness or health benefits, or discounted goods from their employer, regardless of their income. Some employers will wear this extra cost. Others may decide to reduce the amount of fringe benefits provided, or give less generous pay increases or bonuses to staff.

"It is a tax on business and as such it will be a further set-back for regional businesses trying to move ahead and take advantage of the economic recovery. Labour's proposed increase in the top personal tax rate will suck $330 million out of the regions and this new tax will add about $70 million on to that bill.

"Labour has got a credibility problem with its tax policy because it can't possibly fund all its promised extra spending with the money it would raise from proposed tax increases to date. Today's admission from Dr Cullen shows he just has not thought the tax policy through," said Mr English.