16 August 2010 Media Statement

Labour will oppose income splitting

Labour will oppose Revenue Minister Peter Dunne’s income-splitting legislation on the basis that it is badly targeted, favouring wealthy parents over families that really need extra support, says Labour revenue spokesperson Stuart Nash.

Stuart Nash said Peter Dunne was using a form of moral blackmail to target political parties that oppose his legislation, which National has agreed to support to select committee.

“Peter Dunne says parties that don’t favour the bill don’t favour New Zealand families getting a fair deal, but that is rubbish,” Stuart Nash said.

“If the National Government really cares about families, it will put a plan in place to create jobs and growth.

“If the only idea you’ve got is to give more money to the wealthy, which this $500 million Bill will do, that will just disadvantage further most Kiwi families, who are already struggling to make ends meet, and will be struggling even more when GST goes up in October.”

Stuart Nash said that under the Bill’s proposals, the benefits from income splitting increase sharply the higher the primary income earner earns.

“Income splitting does not actually help those who really need it. Many households have both parents working full-time now and would not benefit from an income splitting regime. Those who genuinely do have a ‘choice’ around whether one or both parents work, tend to be those who earn the most. ‘Choice’ implies a level of economic freedom; necessity does not.”

Stuart Nash said that under the proposals the value of an income-splitting tax credit is strongest for households where one earner earns over $90,000 and the other earner nothing or up to $10,000.

“It peaks at $8800 a year (equivalent to $170 a week) for people earning $140,000 a year or more with a non-earning partner. Of course, such households have already benefited strongly from the April 2009 tax cuts and the April 2010 tax cuts.

“It is an absolute nonsense to claim this policy is about caring for families. It is about giving wealthy families an extra leg up, so that there is no incentive for both parents to work,” Stuart Nash said. “National wants to get needy single parents back to work as soon as their children enter school, and yet it is supporting to select committee a Bill that blatantly incentivises one parent in wealthy families to stay home.”

ENDS

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