Labour Making Up Tax Policy 'on The Hoof'Revenue
Revenue Minister Bill English said today that Labour was making up tax policy on the hoof to maintain the credibility of its high tax plans.
"Dr Cullen's latest announcement that Labour would tie the rate of Fringe Benefit Tax (FBT) to income tax rates amounts to a concession by him that the credit card promise on taxes had been broken.
"When Labour decided to increase the top tax rate, Dr Cullen did not realise that the next thing he would have to do was extend the top rate to FBT. He has now conceded that doing so would affect thousands of people earning under $60,000. As a result Dr Cullen has had to shore up the credit card promise that only 5% of taxpayers would be affected by an increase in the top tax rate by devising this new, much more complicated scheme.
"This latest scheme is also inconsistent with previous Labour Party policy on superannuation and life insurance payments.
"The recent Taxation of Life Insurance and Superannuation (TOLIS) proposal would have meant that people were taxed on these policies according to their income tax levels. Labour refused to support TOLIS and it did not make it through Parliament.
"It is clear that Labour is all over the place with its tax policies. Every time Dr Cullen tries to fix one inconsistency, he creates another.
"In addition, Dr Cullen has no idea now how much tax he will raise, or possibly lose, from this new plan. The plan to raise FBT would have raised $70 million. This has already been spent and now it is even less clear how Labour intends funding its spending promises," said Mr English.