(Bloomberg) -- New Zealand’s main opposition National Party is offering tax cuts to families and middle-income voters, hoping to woo them away from the ruling Labour Party at the October election.
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Among a range of measures National pledged to introduce if it wins office, the party will lift income tax thresholds to compensate for inflation and boost tax credits for families, leader Christopher Luxon said Wednesday in Wellington. An average-income household with children would be as much as NZ$250 ($150) per fortnight better off, he said.
The proposals would cost NZ$14.6 billion over four years and be funded by reduced government spending on consultants, a 15% foreign buyer tax on houses worth over NZ$2 million, and revenue raised from climate polluters under the Emissions Trading Scheme.
“After years of economic mismanagement by Labour, topped off by two years of rampant inflation, huge increases in interest rates, and a shrinking economy, most Kiwis are going backwards,” Luxon said. “In particular, the squeezed middle is being left behind.”
The election will be held on Oct. 14 and tax is shaping as a key battleground in the upcoming campaign, which kicks off this weekend with official launches by both main parties.
Labour argues broad changes to the tax system are unaffordable as the economic downturn strains the government’s budget. It has pledged to remove the 15% Goods and Services Tax from fruit and vegetables and to increase benefits for low-income households if it wins a third term.
National said its tax relief plan is targeted at modest earners, with changes to tax brackets capped at NZ$78,100 of income so that everyone earning over that amount will receive the same tax reduction.
Other key planks of the plan are:
Fully restoring interest deductibility on rental properties by July 1, 2026
Reducing the so-called brightline test — a capital gains tax on rental property sales — to two years from 10
Applying a 15% foreign buyer tax on houses worth more than NZ$2 million, raising an estimated NZ$740 million a year
Retaining the foreign buyer ban on houses worth less than NZ$2 million
Ending the commercial building depreciation tax break, raising NZ$525 million a year
Reducing spending on back-office functions at government departments, raising NZ$594 million a year
Cutting government spending on consultants, raising NZ$400 million a year
Moving to user-pays immigration levies, excluding tourist visas
National is currently leading Labour in opinion polls, which suggest it could be in a position to form a coalition government with the libertarian ACT Party. If Labour can rally support, it is likely to need the backing of the Green Party and the tiny Maori Party to secure a majority in the 120-seat parliament.
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