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6am April 11 2009

Media Release

New Zealanders reject next round of tax cuts if it involves borrowing

New Zealanders' overwhelmingly say they don't want the Government to go ahead with the next round of personal income tax cuts if it involves further borrowing.

More would rather have the next tax cuts in 2010 and 2011 than not (45% for, 30% against).

However, 62% say no to them if further borrowing is needed to fund them, according to a new national ShapeNZ survey of 2569 people taken this week.

Commissioned by the New Zealand Business Council for Sustainable Development, the weighted poll has a maximum margin of error of + or - 2.1%.

People also think the personal income tax cuts made on April 1 this year should not have been made if they need to be funded by borrowing in the current economic climate. Some 47% oppose, 36% support and 15% don't know.

April 1's tax cut, new tax credit for single income earners and increased family support and benefit payments are worth between $10 and $18 extra a week to most people.

A majority (54%) will be spending the money on covering day-to-day living expenses, like food and household running costs. Some 18% will save it and 14% pay down credit card debt and 8% will use it to reduce their mortgages. Only 2% will put it into KiwiSaver, while 3% will spend on consumer goods and 1% on travel. 2% don't know what they'll do with the extra money.

If the next round of tax cuts is funded by borrowing, even 61% of National Party voters don't think they should go ahead, along with 69% of Labour voters, 60% of those who chose not to vote in the 2008 election, 86% of Jim Anderton progressive and 83% of Green Party voters. Act voters also oppose another round of cuts (46% against, 44% for, 10% don't know) if they involve borrowing. The Maori Party's voters are 54% against, 39% for.

Households and individuals with incomes between $100,001 and $150,000 a year are least keen about the next round of tax cuts (70%) oppose. By household type, people living alone are least keen (70%), followed by couples with no children and one parent families with two children at home (both 66% against).

Closest call on the future tax cuts comes among people earning $200,000 or more a year: 48% support further cuts involving borrowing, while 52% oppose.

When it comes to spending the current tax cuts, tax credits and benefit rises, people earning between $100,001 and $150,000 a year are most likely to cheer consumer goods retailers. 10% of them say they'll go shopping for consumer goods, the highest number of any income group. Those least likely to buy consumer goods are those earning less than $20,000 a year (2%).

The Minister of Finance, Bill English, has said a decision on the next round of tax cuts will be announced in the May 28 Budget.

The Business Council says that in its surveys over the past two years the enthusiasm for tax cuts has always been tempered by concerns to ensure interest rates and borrowing don't rise and social spending (on education and health and benefits) is not cut.

"This sensitivity doesn't seem to have changed with the economic downturn," Business Council CEO Peter Neilson says. "This result points to the difficult balance to be achieved in this year's Budget."

Detailed results tables for this survey are at www.nzbcsd.org.nz

ENDS

The Business Council believes sustainable businesses are profitable, contribute to social progress and ecological balance - and protect New Zealand's quality of life. The Business Council's 73 members jointly employ more than 88,000 people in managing resources, manufacturing, retailing and the service sector. Members contribute annual sales of $59 billion to the economy, equivalent to 43% of GDP. The Business Council runs a national online survey panel, ShapeNZ, to allow public input on major issues. The panel has more than 13,000 members, is built from purchased lists and is representative of the population as a whole, compared with the 2006 census. ShapeNZ members register and provide demographic and previous party vote information to ensure results can be accurately weighted to reflect the New Zealand population. A report is available here on ShapeNZ methodology. Registration is also available at www.shapenz.org.nz.

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