Following comments from Prime Minister Christopher Luxon in yesterday’s pre-budget speech that not adjusting tax brackets for inflation each year is “lazy”, the Taxpayers’ Union is releasing a new poll that reveals that the vast majority of New Zealanders support automatic inflation adjustment of income tax brackets. 74% of respondents supported inflation adjustments while just 10% were opposed. The remainder were unsure.

Speaking yesterday, Christopher Luxon said, “if you think about it, many countries just index their tax thresholds to inflation each and every year. And the problem when you don’t do that is what we’ve seen in the last six years is inflation actually helps the government books because it ends up actually being quite lazy and actually government can leverage inflation in a very unhelpful and in a bad way, which is what’s happened.”

Voters were asked in the poll: “As welfare benefits automatically increase with inflation, would you support or oppose a law so that income tax thresholds also adjust for inflation, so that someone whose income increases in line with inflation doesn’t end up paying proportionally more income tax than previously?”

Reacting to the Prime Minister’s comments and the poll, Taxpayers’ Union Campaigns Manager, Connor Molloy said:

“The Prime Minister thinks income tax brackets should be inflation adjusted, as do an overwhelming majority of New Zealanders. Then why is he refusing to commit to it at this years’ budget?

“Since 2010, politicians have knowingly allowed stealth tax hikes by refusing to address the issue of inflation dragging workers into higher and higher tax brackets, even when their purchasing power remains the same.

“The impact of this stealth tax is so significant that it means the average worker is paying an additional $49 per week in income tax compared with someone on the same real income when tax brackets were last adjusted in 2010.

“That is money that can’t be spent on filling up the car, buying groceries or paying for kids’ swimming lessons. This is the real human impact of parties championing inflation adjustments of tax brackets in opposition then failing to act in Government.

“Stealth tax hikes are a political choice. Come Budget Day, Nicola Willis and Christopher Luxon need to commit to ongoing annual inflation adjustments. Any tax relief without such a commitment will only be eroded away in a matter of years.”

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