What a difference a decent tax cut would make

Thursday 27 Jan 2005

Rodney Hide - Press Releases -Other

ACT Leader Rodney Hide today revealed figures that showed the best way to boost workers' pay packets and help them pay off debt is to cut taxes.

Last week in his state of the nation address, Mr Hide mooted dropping the top and business tax rate to 25 cents in the dollar and extending the 15 cent rate up to $38,000. As a result someone on $40,000 a year would be $35.86 better-off a week while someone on $60,000 would be $66.55 better-off a week.

Mr Hide said ACT's tax proposals are in fact equivalent to a seven percent pay-rise for the average worker.

"To get a $35.86 increase in net income under the present tax regime, a person earning $40,000 would need their boss to reward them with a seven percent gross pay increase!"

Figures released by Mr Hide show that an average worker on $40,000 currently pays tax of $8,070, leaving net income of $31,930. Under ACT's tax proposals, the average worker on $40,000 will pay just $6,200, leaving net income of $33,800. The boost in take-home pay would be due to most of the income being taxed at 15% rather than the current 21%.

Mr Hide also released figures highlighting the potential impact of ACT's tax proposal for a graduate earning $40,000 who added the extra $35.86 to their minimum student loan repayment.

"An extra $35.86 each week towards paying off the average student loan of $14,547 would see the loan paid off in nearly half the time - four years instead of seven years and eleven months. In speeding up the loan repayments the student would save $2,175 in interest."

"A pay-packet boost of $35.86 would make a real difference to the lives of every Kiwi worker earning $40,000, particularly when it comes to clearing personal debt. ACT knows this and that's why we are the champion of a lower, flatter and simpler tax system.

"Workers have stood by and seen any wage gains eaten up by extra taxes and inflation, with Dr Cullen confirming that the average Kiwi household is no better off after five years of Labour. Households are sick and tired of being squeezed," said Mr Hide.

ENDS

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