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Sunday, 16 November 2008

And United Future's Baubles Are...

National and United Future's confidence and supply agreement is out.

Portfolios outside Cabinet:
Peter Dunne gets Minister of Revenue and Associate Minister of Health.

Policy Concessions Include:

  • Maintain the policy, research and advocacy role of the Families Commission whilst seeking to achieve administrative efficiencies between the operations of the Families Commission and the Office of the Children’s Commissioner.
  • Reducing elective surgery waiting lists by greater utilisation of private hospital capacity, in a planned way where this cannot be met by the public hospital system;
  • Progressing the long-term medicines strategy for quality use of pharmaceuticals in the health sector, Medicines New Zealand, including the role Pharmac should play in that strategy.
  • Support Public Private Partnerships for major roading infrastructure developments where these are deemed to be the preferred options regionally and nationally, such as the Transmission Gully highway.
  • The government notes that United Future has been committed to income splitting as a key part of their tax policy and agrees to support appropriate legislation to First Reading in Parliament.
  • Proceed with the establishment of a Big Game Hunting Council as part of a national wild game management strategy with a view to it becoming a statutory authority.
  • And the government acknowledges United Future’s ongoing support and interest in the development of the Seniors’ Gold Card, the Community and Voluntary sector, and advancing the interests of the disability sector.
Most of it is the usual centrist stuff *sigh* but I will comment of the standouts.

The Families Commission was a dumb idea and it has been a dumb bureaucratic nanny-state money-gobbler, just like the Children's Commission, ever since. So ugh! to that policy.

Income splitting is a positive move to lowering taxes but it adds complexity to the tax laws and does not benefit enough people. Lowering the top tax rates as the government are planning to to 30% would make the need for income splitting largely redundant.


  1. Top rate to 30%! That's a good start. Are they going to increase the brackets too. I know this stuff has been talked about, I just haven't seen the specifics (I am aware of Act policy on tax which is good but not good enough).

    While I support income splitting, I agree that tax law should be simple not complex, and flat tax would be better.

  2. No details yet but I think it has to be on the cards. I recall John Key complaining that Labour hadn't shifted them in years beyond adding the "rich" tax for those over $60k.

    Income splitting would help us a lot so don't get me wrong. If it gets passed I will be happy as Matt and I are in the ideal position to benefit from it but flat tax would achieve the same thing and it would help more people and its simpler and cheaper for the state to run.

  3. "Income splitting is a positive move to lowering taxes but it adds complexity to the tax laws and does not benefit enough people."

    Complexity aside, why should it be denied just because it does not benefit enough people? Maybe some mothers would stay at home with young children ( and no Govt assistance) if this became law.

    "And the government acknowledges United Future’s ongoing support and interest in the development of the Seniors’ Gold Card...."

    ...and bequeaths, also, Winston Peters lounge lizard shoes.

  4. I would love to have the option to stay at home and not receive any government assistance. I want to home school my kids at the moment and not work. So don't get me wrong I totally support achieving that end but I think flat tax is a better mechanism to get there with.

    With flat tax, regardless of who in the family is working, everyone is on the same, lower, tax rate. It achieves the same thing as income splitting, i.e. the combined income ends up on the same tax rate as it would with flat tax but the process is simpler administratively (so less cost to the taxpayer) and everyone benefits and its fairer as no one is penalised for success and there are no cut-off zones where you are almost actually better off earning slightly less if you just cross over them.

    See some examples:
    Couple A - one earns $50k, the other earns $20k. Their tax rates are 33% and 21%. Income splitting would mean their total income would be viewed as $70k, so $35k each, so both would be on 21%.

    Couple B - one earns $70k - 39%, the other earns $45k - 33%, income splitting means they'd be on 33% each.

    Put in a flat tax of 21% and everyone is on 21%, including single people.


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