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Economist Dr Eric Crampton evaluates the new coalition Budget ‘charade’

Summarised by Centrist

Dr Eric Crampton, lead economist of the thinktank NZ Initiative, gives a withering look at the tax savings and tax revenue of the new National budget compared to previous Labour budgets.

Describing how income tax thresholds were handled 2011 through 2023, Crampton says nearly one million wage/salary earners were pulled from the 10.5% tax bracket (the lowest) into the 17.5% range (next increment) “and another eight hundred thousand [taxpayers were pulled] from the 17.5% range into the 30% tax bracket.”

Crampton argues the current government’s handling of revenue to tackle inflation and a structural deficit isn’t good enough. 

“Despite the tax threshold adjustment, core tax revenue will be a larger share of GDP than it was in 2019 – all the way through to 2038. Inflation will again keep pulling taxpayers into higher tax brackets,” he writes.

His conclusion: 

“​Automatically inflation-adjusting the tax thresholds would end the charade.”

Read more over at The NZ Initiative

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