Bolger forecasts tax increases

Press, 25 February 1989, Page 11

Bolger forecasts tax increases

By

GLEN PERKINSON

New Zealanders and their businesses would be hit with tax rises of between 2.5 and 12 per cent soon, the Leader of the Opposition, Mr Bolger, said yesterday.

The tax increases would affect personal, GST and company taxes, he told Christchurch business people. To honour the Government’s pledge to cut New Zealand’s $2.6 billion deficit to $650 million, Mr Bolger calculated the Minister of Finance, Mr Caygill, would: • Increase GST from 10 per cent to 12.5 per cent, earning S7BOM. • Boost company tax from 28c to 40c in the dollar, resulting in another S7BOM in revenue.

• Make high-income earners pay another 7 per cent in income tax, taking their rate to 40 per cent. That would provide another S32OM a year.

The moves would earn almost $1.9 billion and enable Mr Caygill to achieve his stated objective of cutting the deficit to S6SOM. Mr Bolger also warned high-income earners the Government could achieve its budget target through increasing the top rate only — from 33c to 70c. That was the Prime Minister’s favoured option, he said.

A GST increase of more than 5 per cent would also achieve the income needed to cut the deficit, he said. But he said the scattered increases would be Mr Caygill’s choice. Levies on cigarettes and alcohol were also Government targets in its income search.

Mr Bolger said the Opposition was committed to low taxes, low inflation and low interest rates.

Its policies were affordable because they would encourage economic growth while spending and borrowing were cut, he said.

Mr Bolger said National would:

• Make long-term savings tax deductable. • Reform company law and the stock exchange to protect investors.

• Reform labour relations allowing more flexibility in wages and conditions.

• Put an end to land tax and gift duties. • Repeal the capital gains tax hinted at by the Government.