14 May 2012

Greens say figures reveal $2b hole thanks to tax cuts

10:12 am on 14 May 2012

The Green Party says the Government underestimated the cost of the 2010 tax cuts, which reduced the top tax rate from 38% to 33% and cut the company rate.

At the time, Finance Minister Bill English said the cuts would be fiscally neutral, because goods and services tax (GST) receipts would rise.

But Greens co-leader Russel Norman told Radio New Zealand's Morning Report programme on Monday that government figures for the period since the tax cuts were implemented show they cost $5 billion compared with GST receipts of $3 billion.

"When the Government introduced the changes they assured us at the time, because we were quite critical of it, that it would be broadly fiscally neutral - but they were completely wrong.

"In fact, it's been broadly very, very expensive and we are now borrowing $2 billion in 18 months to fund tax cuts."

Dr Norman believes it has been a reckless move.