Labour's economic strategy for 2023 is being revealed. Yesterday PM Ardern suggested the Government is looking at income support measures, but these might come through the tax credit system - like Working For Families,
“We recognise the need to support people. We recognise the need for our low- and middle-income earners and that is what we are doing, but as it stands for future policy that’s obviously down the track,” Ardern said.
So what's going on? Well, I invited Sir Roger Douglas, the former Finance Minister, to speak to a class of students at the University earlier this term, and he gave the best explanation that I have heard - and not one you will read in the mainstream media.
It goes like this: low & middle earners have had their average tax rates pushed up by bracket creep. Rates for high earners have barely changed. Although the PM & Finance Minister argue the Nats want tax policies that favor the rich - the truth is that Labour is the party that has run a tax system which is punishing low & middle earners due to rising inflation.
Now here's the PM's cunning plan: having received more from low & middle earners in taxes, she wants to pay back (some of it) to (some of them) in the form of working-for-families credits, or welfare. Of course, if you don't have children, you don't fall under "working-for-families", so you probably wont get anything.
Why is this a cunning plan? Since the PM is making more Kiwis dependent on her for welfare payments - and the more dependent they are the more likely they are to vote for her. What a "creepy" policy. It's awhile since Sir Roger was Finance Minister, but he hasn't lost his clarity when it comes to analyzing how a policy is actually "working".
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