Thursday, October 02, 2008

Tax Cut Theory

Just a theory based on a bit of random supposition - feel free to explode it if you like.

But ....

If National's looking at ways of covering the cost of its tax cuts package and alterations to KiwiSaver are in the mix, then what's the chance of the $1000 Government kick-start contribution being the part they alter??

Logically the employer tax credits are unlikely to be in the mix. Targeting that would seriously piss off employers and the business community which, lets face it, are a National Party constituency.

So far over 800,000 workers are signed up to KiwiSaver and have claimed the $1000 contribution. That's 800 million dollars. Now looking at the Department of Statistics workforce figures they say there are over 2.1 million people in the workforce. On that basis there are around 1.3 million workers left that potentially could sign up to KiwiSaver.

So ... if National removes the kick-start contribution it has $1.3 billion dollars of previously committed money it can set aside for its tax package.

And there is a way they can sell it too. If a tax cut is $50 a week then the one off $1000 payment that would have been in KiwiSaver is covered in 20 weeks, and the tax break accrued every extra week becomes an added bonus as far as the taxpayer is concerned. Potentially money that can be saved for retirement.

As I say it's just a thought and it probably has holes you could drive a truck through.

No comments: