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Thursday, May 22, 2008

Opportunity seized 

Three years and three days ago, when Michael Cullen last delivered a pre-election budget, I wrote a blog post entitled "Opportunity Lost", criticizing the promise of modest tax bracket adjustments in three years time (i.e., April 2008). I asked:
What kind of election pledge is "vote for us and receive a very modest tax break in 35 months time"??
I still think those adjustments should have been implemented, but that's by-the-by for now. Cullen is considerably shrewder this year, even when he doesn't have a lot of room for maneuver. A rate cut that benefits everyone who earns a dollar, and relatively substantial bracket adjustments on top of that, beginning to take effect at the earliest (pre-election) opportunity.

As Vernon Small has observed:
...if anyone can think of a way to deliver significantly more to those on low pay AND deliver to the struggling households in the middle AND give relief to the $60,000 plus income earners that have been the crux of complaints about Cullen-the-reluctant-tax cutter … oh yes, and not blow the Budget even more … then I’m all ears.
However, the hard-to-please NRT has changed his tune. Compare his 2005 budget comments with his moan this afternoon.

2005: The tax change (adjusting tax brackets for inflation every three years from 2008) represents a lost opportunity - not to cripple the budget with huge tax cuts, but to undermine tax as an election issue. Bracket changes are relatively cheap compared to cuts in tax rates and are widely (and correctly, IMHO) seen as being fair; implementing them ASAP would have been a cheap and easy way of robbing National and ACT of a talking point without significantly undermining Labour's key contention that large-scale tax cuts are unaffordable without cuts in services. Instead, by delaying them, the government has provided yet another rod for their own back.
2008: So the centrepiece of Cullen's budget left me cold. ... All we get is a tax cut which at first glance at least favours the poor over the rich, but still buys into right-wing agenda that the solution to every problem is a tax cut. And this is supposed to inspire people to vote for them?
Needless to say, I agreed with him in 2005, and disagree today. Hopefully that means I'm the consistent one.

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