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Geof Nightingale: Tax expert says National's tax relief seems a fair way off · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: So National has dangled the carrot of tax cuts, but
• 0:03
  Speaker 1: not until the books are back in surplus. It is
• 0:06
  Speaker 1: setting aside $ 15. 4 billion for health over four years, with
• 0:10
  Speaker 1: $ 7. 5 billion left in the operating spending. But despite promises
• 0:14
  Speaker 1: to lift defence spending to 2% of GDP by 2034,
• 0:17
  Speaker 1: there's actually no specific funding for it yet, so how
• 0:20
  Speaker 1: are they going to do that? New Zealanders need some
• 0:23
  Speaker 1: predictability and stability, and that is what they will get
• 0:26
  Speaker 1: with National.
• 0:27
  Speaker 2: All right.
• 0:27
  Speaker 1: So Jeff Nightingale is a tax expert and joins us
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  Speaker 1: right now. Jeff, what did you make of the whole thing?
• 0:32
  Speaker 2: Good morning, Andrew. Yes, they are sort of dangling tax
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  Speaker 2: cuts in front of us, but probably with some good justification, actually,
• 0:41
  Speaker 2: giving the outlook over the next four years.
• 0:43
  Speaker 1: Well, yeah, but the global outlook, the bond markets and
• 0:47
  Speaker 1: all that, it looks a bit dodgy. I mean, honestly,
• 0:49
  Speaker 1: the big complaint is that we don't have enough government
• 0:51
  Speaker 1: revenue to do the basic stuff that we want to
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  Speaker 1: do well. Is tax cuts really just a lolly scramble?
• 0:57
  Speaker 2: Yeah, well, that's fair. But the thing is, with the
• 1:02
  Speaker 2: kind of tax cuts that they're proposing, they're not really
• 1:04
  Speaker 2: tax cuts. What they're doing is avoiding tax increases by stealth.
• 1:09
  Speaker 2: So as economic growth gets going and our income starts
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  Speaker 2: to rise, if you leave the tax brackets unadjusted, people's
• 1:18
  Speaker 2: average tax rates start to go up and it goes
• 1:21
  Speaker 2: up faster than their income grows. And we call that
• 1:25
  Speaker 2: bracket creep or fiscal drag. And that was what they
• 1:27
  Speaker 2: adjusted in 2024 and cost about $ 2. 6 billion to make
• 1:32
  Speaker 2: adjustments to the lower three and four tax brackets. If
• 1:35
  Speaker 2: they did that again in 28, 29, when they're forecasting
• 1:38
  Speaker 2: the surplus, they've got room to do that. And then
• 1:41
  Speaker 2: it's a priority question of whether that's the right thing
• 1:44
  Speaker 2: to do. All right.
• 1:45
  Speaker 1: So we hear they've got $ 7. 5 billion left in operating spending.
• 1:50
  Speaker 1: We know that Labour has almost no wriggle room after
• 1:52
  Speaker 1: their pay equity thing. How much wriggle room are National
• 1:56
  Speaker 1: promising or do they have?
• 1:58
  Speaker 2: They've got very little. So if you think about the
• 2:01
  Speaker 2: 2024 bracket adjustments, that was $ 2. 6 billion. The surplus in
• 2:04
  Speaker 2: 2019 is $ 4 billion. and the $ 7. 5 billion unallocated spending
• 2:12
  Speaker 2: all arrives in 29 and 30, so it's a long
• 2:15
  Speaker 2: way out. But the other thing that is there is
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  Speaker 2: 2029 is an election year, so there'll be promises being
• 2:23
  Speaker 2: made to fight the 29 election around spending as well,
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  Speaker 2: which is going to make it very difficult to also
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  Speaker 2: promise a tax cut.
• 2:31
  Speaker 1: And how confident are you that they'll meet the surplus
• 2:33
  Speaker 1: by 28, 29?
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  Speaker 2: It's a big ask. There are some assumptions about economic
• 2:39
  Speaker 2: growth getting going in there. It is reasonable and feasible.
• 2:43
  Speaker 2: In fact, it's Treasury that's predicting that surplus rather than National.
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  Speaker 2: But a lot of things have to go right for
• 2:49
  Speaker 2: New Zealand, and we've had a couple of years of
• 2:50
  Speaker 2: a lot of things going wrong. So it is feasible,
• 2:54
  Speaker 2: but by no means certain.
• 2:55
  Speaker 1: Good stuff, Geoff. Thank you so much.
• 2:58
  Speaker 2: For more from Early Edition with Ryan Bridge, listen live
• 3:01
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• 3:04
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