Cullen Over-Taxing 352,000 Kiwis

act-new-zealand

Sun Sep 23 2007 12:00:00 GMT+1200 (New Zealand Standard Time)

Cullen Over-Taxing 352,000 Kiwis

Sunday, 23 September 2007, 3:11 pm
Press Release: ACT New Zealand

New information obtained in response to my written Parliamentary Questions has revealed that hundreds of thousands of Kiwi taxpayers are being grossly over-taxed because of Finance Minister Dr Michael Cullen's failure to adjust his self-imposed five percent threshold for the top tax rate of 39 percent, ACT New Zealand Deputy Leader Heather Roy said today.

"In 1999 Labour introduced a new top tax rate of 39 cents in the dollar," Mrs Roy said.

"At that time, Dr Cullen stated in Parliament that: 'ninety-five percent of people will not be asked to pay more tax. Instead, only the top five percent of income earners will pay more'.

"The promise to tax only the top five percent of earners was never kept: had it been, the Minister would have adjusted the initial $60,000 threshold so that by the 2005/06 financial year only those earning over $79,000 would have had to pay the top tax rate of 39 percent.

"Instead, the threshold was left at $60,000 - and 352,000 New Zealanders were over-taxed by a total of $273 million - an average of $775.56 each - for the 2005/06 financial year. Given that the level of over-taxation was initially only $60 million in 2000/01, it is clear that this situation is steadily growing worse.

"Over-taxing 352,000 Kiwis has contributed to Dr Cullen's huge surpluses year after year, and shows that he has a complete inability to balance the country's books.

"This is a complete disgrace. In his quest to swell his Government's coffers, Dr Cullen has broken his promise to the nation and is robbing hundreds of thousands of hard-working New Zealand families. This entire situation simply reinforces the need for tax cuts now," Mrs Roy said.

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Income Earners In Top Tax Bracket - 2000-2006 figures Year

Top 5% Threshold Earners taxed at 39%

Taxpayers above (5%) threshold 2000/01 $66,000 194,000 146,000 2001/02 $68,000 221,000 153,000 2002/03 $69,000 237,000 155,000 2003/04 $73,000 277,000 155,000 2004/05 $76,000 313,000 159,000 2005/06 $79,000 352,000

165,000 Compiled by ACT from written Parliamentary Questions 16032 and 16033.

Written Parliamentary Questions

15338: Roy, Heather -Due Ministers office: 7/9/2007 Question 15338: What would have been the cost to Government revenue to hold the 39% tax rate to only the top 5% of income earners for the 1999/2000, 2000/2001, 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006, 2006/2007 financial years?

Reply: The fiscal cost of applying the 39c top tax rate to only the top 5% of individual taxpayers for the 2000/2001 to 2005/2006 income years, is presented in the following table. Costs can be expressed either gross (the direct effect on income tax), or net of an assumed consumption impact on indirect tax receipts. The 39c tax rate did not apply in 1999/00, and data for 2006/2007 is not yet available as tax returns are still being filed.

15339: Roy, Heather -Due Ministers office: 7/9/2007 Question 15339: What income level would a taxpayer have begun paying the 39% rate, if it had been enforced on only the top 5% of income earners in each of the 1999/2000, 2000/2001, 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006, 2006/2007 financial years? Reply: The answer is presented to the nearest $1,000 in the following table. The 39c tax rate did not apply in 1999/2000, and data for 2006/2007 is not yet available as tax returns are still being filed.

16032: Question: Further to the answer to question for written answer 15346 (2007), what number of New Zealanders paid the 39% tax rate in the 2000/2001, 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006, and 2006/2007 financial years? Answer Text: Data for 2006/2007 is not yet available as tax returns are still being filed. For the remaining years, the number of individual taxpayers paying the 39% rate of income tax is estimated as follows: 2000/01 194,000 2001/02 221,000 2002/03 237,000 2003/04 277,000 2004/05 313,000 2005/06 352,000

16033: Question 16033: Further to the reply to question for written answer 15339 (2007), what number of New Zealanders would have paid the 39% tax rate had it been kept to only the top 5% of income earners, for the 2000/2001, 2001/2002, 2002/2003, 2003/2004, 2004/2005, 2005/2006, and 2006/2007 financial years? Reply: The answer is presented to the nearest 1,000 people in the following table. Data for 2006/2007 is not yet available as tax returns are still being filed.

ENDS

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