Indexing tax ‘not seriously considered’

Press, 12 July 1985, Page 4

Indexing tax ‘not seriously considered’

PA Wellington A proposal to index income tax brackets to the rate of inflation was not being considered seriously by the Government, said the Prime Minister, Mr Lange, yesterday. However, he said he was “warm” on the idea proposed by the Minister of Finance, Mr Douglas. In a radio interview, Mr Douglas had said he was looking at such a system so that wage increases were not dissipated by movements into progressively higher tax brackets. Indexation would make taxation more honest, he said. He had the matter “under review” and would be looking at it quite soon. It would probably not form part of the goods and services tax and accompanying income tax cuts to

be announced in September, but would be addressed by the time the tax reform package was introduced in October next year. Asked about the idea at his post-caucus press conference, Mr Lange said he was “warm,” But the matter was not on the Government’s agenda. He said he had floated the idea himself shortly before he went to Australia on holiday. “The theoretical possibility of indexation is. good but you have to have all the things right. “You would be crazy to index from the existing totally anomalous tax base,” he said. There was no time frame for indexation to be introduced.