EMBARGOED 6am 11 April 2009 Media Statement

Broken promises on tax cuts will leave workers worse off

While making promises of tax cuts the centrepiece of their election campaign National never acknowledged to the public that in a worsening world economic recession that would inevitably involve borrowing to pay for them, Labour Leader Phil Goff says.

“Today’s survey by the Business Council for Sustainable Development shows that nearly two thirds of New Zealanders reject tax cuts based on borrowing,” Phil Goff said.

“There are now clear signals from National that having rewarded high income earners with big tax cuts on 1 April it will now renege on its promises of further tax cuts in 2010 and 2011 because they are not affordable.

“However, National knew that was the case when it made promises far more expensive than Labour’s in the election campaign.

“It knew that in December when slashing Labour’s tax cuts for low and middle income families and it was crystal clear again on 1 April when it rewarded its wealthy supporters with the highest tax cuts at the top end while middle income people got modest increases and those below $40,000 got nothing at all.

“In fact, of the $800 million National lavished on extra cuts, a third went to just the top 3 per cent of income earners.

“Now in the Budget those who got nothing will be told this is as good as it gets,” Phil Goff said.

“Wage and salary earners in the public sector are on notice for nil pay increases because no money has been budgeted.

“In the private sector some will be facing pay cuts in lieu of job losses.

“Meanwhile, costs like power bills will go up because the Government is demanding higher dividends from SOEs. People will be worse off in real terms.

“The time for National to reconsider its tax cuts was before 1 April when they were advised that to provide the best economic stimulus they should refocus their tax cuts on those who would spend them immediately on necessities rather than on those who would save them. They ignored that advice.

“The net effect of the Government’s actions has been less economic stimulus. That means more business and job losses. Lower income families are already much worse off than under Labour’s tax cuts with National now reneging on its promises for further tax cuts.

“Most families will end up being worse off than they would have been under Labour’s package,” Phil Goff said.

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