By: Gurbir Singh
More than 11 million Australians will benefit from the A$17.8 billion tax cuts proposed by the Australian government yesterday.
This surprise move is expected to beat the COVID-19 recession, deliver an immediate boost to household budgets and help pull the economy out of its deep deficit.
According to reports, people earning more than $120,000 will see the biggest benefit, with a permanent cut of $2,430 in 2020-21 and beyond. Those earning $48,000 to $90,000 will gain an extra $1,080 in 2020-21 from a one-off extension of the low and middle income tax offset.
If Australia can do it, then why National’s “massive” temporary tax cut policy faced huge criticism from their main political rival, Labour and the PM calling it a “unaffordable and irresponsible”?
“Today, we are facing the biggest economic downturn the world has seen in living memory,” National leader Judith Collins said.
“To keep our economy ticking, New Zealanders need money to spend.”
That spending money -an extra $50 a week for a middle-income earner, would come from National’s proposed policy of tax cuts.
That money is desperately needed by ordinary New Zealanders in this current hour of financial crisis.
But Labour’s criticism of National policy was ‘harsh’ and its leader and PM, Jacinda Ardern said it was “totally irresponsible” for National to be “raiding” the Covid-19 fund to pay for tax cuts.
Labour alleged it would use $4 billion from the unallocated Covid-19 contingency fund.
Even the Greens were not convinced as its co-leader James Shaw believed as a result, schools would have “overcrowded classrooms, longer wait times for essential medical treatments, and less protection for nature.”
According to an Australian columnist, “the (Aussie) government has extended the LMITO for two reasons – first politically, ignoring 80% of taxpayers during a recession would be suicide; and second during a recession not giving a tax cut to low and middle-income earners would be moronic.”
Tax cuts mean extra money in the ‘back-pockets’ of people to spend, and spending more helps the domestic retail and service industry survive.
New Zealand has been pushed into its worst and deepest recession in decades with country’s GDP shrinking by 12.2% this year.
With service industries like retail, accommodation and restaurants, and transport battered by Covid-19, consumer spending fell more than 25 per cent.
“..Labour has made the economic hole deeper and the impact harder than it needed to be,” National finance spokesperson Paul Goldsmith said.
The question now being asked is if Australia can do tax cuts as a stimulus to beat recession, then why is Labour ignoring ordinary taxpayers in our own recession in New Zealand? Years from now, will it eventually prove ‘suicidal or moronic’- or both?