LABOUR BOOSTS MARGINAL TAX AT LEAST 33 1/3%

More than 1 Million Working People Penalised

More than 1 million New Zealanders earning $14,000 to $38,000 would at least pay 331/3 percent more income tax on every extra dollar they ever earn, under Labour's new proposals, Finance Minister Bill Birch said today.

Labour was clawing back the cost of its concessions by raising marginal tax from 21c to 28c on every extra dollar earned by working people from $14,000 to $35,000, and from 21c to 33c on income from $35000 to $38,000.

"Labour aims to spend $6.5 billion more in three years, and boost debt by $9 billion, while imposing marginal tax penalty of at least 331/3 percent on every low or middle income worker earning an extra dollar," Mr Birch said.

"That shows how far Labour leader Helen Clark is still dominated by her socialist academic background. She proposes huge hand-outs, but funds them by penalising all working people, every time they earn an extra dollar.

"Anyone with an ounce of economic nouse knows that is the worst conceivable way of helping people. It stifles growth by punishing people every time they make an effort to help themselves, or to help the economy.

"I don't think she understands the economic risk she is taking. This is a fiscal suicide package. The policy mix involved is not capable of sustaining growth and confidence at the levels required to fund the programme.

"Her profligate spending plans will cut our fiscal surplus to the bone. She has nothing left to save herself when the fiscal deficiencies of the package reduce confidence, stall growth, and push unemployment back up again."