Labour will roll back National tax cuts to fund Kiwi families

The Labour Party says it will eliminate National’s tax cuts to increase the Family Tax Credit and raise the abatement threshold for Working for Families if it is elected to government later this year.

Party leader Andrew Little has also revealed the party will reinstate the Independent Earners’ Tax Credit and introduce a Best Start payment to help families with costs in a child’s early years.

He made the announcement in Auckland this afternoon as part of Labour’s Families Package.

“Now is not the time for tax cuts,” Mr Little says, adding under National’s budget, the top 10% of income earners will receive an extra $400 million from the tax cuts.

He says rolling back the tax cuts will “free up” $1.5 billion a year.

Labour says it will provide the funding for a targeted package that delivers more to families with children and people in need, and costs less than $900 million a year.

“This creates more than $2 billion over four years of net savings,” Mr Little says.

This saving will help the party increase the Family Tax Credit base rate for the eldest child (aged between 16-18) to just under $5900 – at the moment, that number is $5300 for the eldest child aged 16-18 and $4800, aged 0-15 (due to be increased to $5300, according to Budget 2017).

Threshold changes as well
Labour would also raise the abatement threshold for Working for Families to $42,700. At the moment it is at $36,350 and due to be cut to $35,000 according to Budget 2017, Labour says.

“Labour’s Families Package is carefully designed to target low and middle-income families. Every family receiving Working for Families will get more with Labour, and 30,000 more families will start to receive payments,” Mr Little says.

“Families on middle incomes will receive up to $48 a week more in Working for Families with Labour’s package than under National.”

The party will also introduce a Best Start payment of $60 a week for each child in the first year after paid parental leave ends and for low to middle-income families up to age three.

When children are aged one to two, the payment will abate above $79,000 of household income at a rate of 20.8c/$1. Best Start will cost $303 million in 2018/19 and will replace the Parental Tax Credit, Labour says.

Labour also says it will use the revenue from abolishing the $150 million housing “speculator tax loophole” to fund grants for families to install insulation and heating.

Labour will fund 600,000 grants of up to $2000 per dwelling toward the cost of upgrading insulation and heating.

“[We will] also help older New Zealanders and low-income families heat their homes in winter with the Winter Energy Payment,” Mr Little says.

He says the winter payment will be $700 for couples and parents with kids at home, and $450 for single people. The Labour leader says roughly one million people will benefit.

The annual cost will be $374 million, Mr Little says.

In total, Labour’s whole family package will cost just shy of $900 million a year.

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