Tax Cuts

There is more noise about tax cuts being made from both sides of the fence. Of course, this is the time to make noise about it as the budget is right around the corner. Labour has a chance here to inoculate of National’s key “policies” in the upcoming budget, but I wonder if it’ll be enough.

Tax cuts, as with almost any political pivot, is a mixed bag. It’s a great vote winner as everybody loves free money, but it can end up very costly to the Government coffers and can often cause more trouble than they fix with regards to inflation and driving up interest rates to soak up that extra cash-in-hand that Joe Sixpack now has.

Of course, the T-word is all the more relevant these days as a lot of people are finding it harder and harder to get by with fuel, food and housing prices being up and looking to keep rising (perhaps excepting housing) and people see a third of their paycheck disappear to the government. To this end, the National Party appear to be pushing their ideas for across the board tax cuts as a form of social welfare where as Labour seem to be looking to target relief to those at the lower end of the scale.

The funny thing is, Labour doesn’t seem to want to touch the tax system but instead offer support to the needy via rebates, benefits and subsidies. National, conversely, want to fiddle, with ideas being thrown around such as a 0% tax at the low end of the scale, and moving/eliminating the top bracket.

Now, I generally support the progressive approach to taxation and, although it’s always nice to have some extra money, what is the real cost of that tax cut? I don’t need it to survive, there are people that need it more than me. It’s confusing to me to see the sense of entitlement that people believe they have to societies money. Tax is the cost of being in a society and although people moan about taxes being high (they aren’t, look here) and I don’t think it’s wrong to ask the people who have benefited incredibly from this society (money movers, I’m looking at you!) to cough up a larger chunk of their income to keep everything running smoothly.