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Slash company, personal tax rate to 17.5% — Jamie Whyte

ACT would immediately cut the top tax rate for individuals and companies, to 24%, leader Jamie Whyte says.

Dr Whyte says that would be the first step along the path to reducing both rates to 17.5% by 2020.

Currently the top individual tax rate is 33% for income over $70,000. The company tax rate is 28%.

Mr Whyte made his comments ahead of his party releaseing an alternative Budget (below).

The rate could be achieved by cuts on spending, Dr Whyte told TV3's The Nation during a debate of minor parties. 

"We propose no cuts on health and education," he added, or welfare for lower earners.

His party would cut what he terms "corporate welfare" — a top on which supporter and commenter Matthew Hooton has recently been been focussed on in a series of columns focused on the MBIE super ministery.

ACT would also:

  • Lift the age of eligibility for National Superannuation to the age of 67 and index its increases to inflation rather than wages
  • Reintroduce interest on student loans
  • Sell all state owned commercial enterprises including KiwiBank, KiwiRail, Landcorp and the Super Fund (which currently has total assets of $25.19 billion)
  • Close the departments of Women's Affairs, Pacific Affairs and Tourism
  • Abolish subsidies to attract big budget movies
  • Axe MBIE agencies like Callaghan Innovation, whose $420m in "growth grants" for tech businesses over the next three years are filed under "government waste"

NZ First leader Winston Peters said ACT's proposal would mean a massive cut back on everything.

"If we had a fair tax system, everyone would pay their fair share and you could actually decrease taxation."

Like KiwiBank, interest-free student loans and the Super Fund (or "Cullen Fund" as it's nicknamed) was started under Helen Clark's Labour government. National has suspended payments into the fund, but been loath to abolish it.

Mr Key has said KiwiBank will not be sold under his leadership.

ACT also wants to sell the government's remaining 51% stakes in power companies Meridian ($4.69 billion), Mighty River Power ($3.19 billion) and Genesis ($1.95 billion), and sell off national grid operator Transpower ($1.43 billion) and sundry other Crown assets.

The party  says all up, the asset sales would bring in $20 billion — although some of the state-owned companies such as KiwiRail Holdings ($1.2 billion), Railways Corp ($3.3 billon) KiwiBank, Kordia ($93 million) and Solid Energy ($92 million) arguably have little or no appeal to private sector investors.

The govenment could realise another $25 billion by liquidating the Super Fund and using the money to pay off debt, ACT says.

That's the kind of chunk of change that could address a problem identified by The Economist: the lag between tax cuts, and economic growth spurred by those tax cuts; a lag that can cause a big run-up of debt if government spending is not immediately slashed (an unlikely prospect in the MMP environment).

As things stand, the Fund has been peforming strongly (as former ACT leader Rodney Hide has acknowledged — albeit in the context of lobbying for its demise).

But it is still falling behind its original projections. In an Ask Me Anthing session with NBR readers, Super Fund CEO Adrian Orr said the original target as per the legislated funding formula was for the size of the Fund to peak at around 32% of nominal GDP (NZ's annual production) in the 2030s. With National's halt to capital contributions in 2009, that peak will now not be reached until the 2080s, Mr Orr said.

RAW DATA: ACT's Alternative Budget 2014

See below or click here to view the original PDF.

Comments and questions

Well done Jamie. You have my vote.

Don't waste your party vote on ACT. They will get nowhere

Go and stand for a seat Jamie, then Act will probably get my party vote.

If he stands for a particular seat, that implies that your party vote will be wasted.

Still, makes no difference. A vote for him is wasted anyway.

The whole point of democracy is to vote for who you prefer. If people don't vote for a party they prefer because they think it will be wasted, then it will. If they just vote as they prefer, it may well make a difference.

The big parties just love (and propagate) this defeatist talk, and suck up the votes of many.

Gosh, I remember the late Sir Robert Muldoon, when referring to Dr Michael Cullen, saying "some doctors make you feel well, but there are some doctors that make you feel sick".

With talk of reducing the top tax rate to 17.5%, I must say that Dr.Whyte definitely falls into that first category. Lets hope for the health of the country he gets to manage the dispensary.

Jamie you are a loony

Your model simply doesn't work - 1+1=2 not 4

Hopefully Act finally dies at this election - it is already in its final stages of life with a loony like you leading it

It would certainly work better than having your earnings taken from you, then given back by our wonderful governments deciding what you and I need or should have.

Like roading, healthcare, policing and a myriad other things the individual cannot provide. But you don't want to pay for that do you.

Where does it say in ACT's policy that they want to remove funding for those areas?

Just printed off ACTs and Jamie budget. Brilliant. Exactly what has to happen.
You have my vote and Im sure many others.

Has my vote. Great ACT is putting its' past behind it

Regardless of any other policy changes, abolishing 90% of MBIE, Ministry of Tourism, and 90% of MPI would ensure that farmers, the tourism industry, and all businesses would flourish as never before.

Yes, there would be a rise in unemployment as thousands of bureaucrats lost their jobs. But they are all smart and capable people - just ask them - so they will find jobs in the businesses that grow after corporate welfare is reduced.

Yep. Look at the UK. The conservatives has slashed the budgets and bureaucrats employed over the last few years and unemployment is now much lower. The able bureaucrats are now in productive jobs.

Absolutely less paper more production

Where do we send the political donation?

Is the IRD still datamining the NBR comments section?

Articles like these probably ACT like honeypots for them ... just while we are musing about budgets that need a severe axing (followed by criminal prosecutions where warranted).

Lower tax rates release such energy and innovation the tax take may actually rise. At long last a budget for future prosperity in NZ and not an election bribe in sight.


It would be fantastic for all of us, but no show of getting it implemented. Most NZers like having their hand held, even when being led to the gallows.

Sweet lord, the same old short-sighted clap-trap from a bunch of tight arses for a bunch of tight arses, trying to pretend that the society that you live in and enjoy and benefit from doesn't actually exist.

So you have sold all our assets to Messrs Rothschild and co and we have still run out of money because no-one is paying any tax - then what Jamie? We have whip around? A sausage sizzle? Sell our second cousins in to marriage? Are you going to look after everyone who hasn't managed to save a pension because they are not all on $200K plus like all your mates? Do you even know what the average age is in this country?

Anyone considering voting for this failed, knee-jerk neo-liberal garbage needs their heads read (ie all of Epsom no doubt). We live in a complex world, and no it's not all straight forward, some people DO make the wrong decisions sometimes, and no you are not right all the right all the time, even though you are totally convinced you are (just like Brash, Prebble, Gibbs and others of that ilk, while reminding us all of it ad nauseum).

I thought studying philosophy was supposed to broaden the mind, not narrow it?

What's next is to join the National Party fund raising ' cabinet club'.

As I understand it direct personal taxation is under 38% of the tax take. A movement down to 24% personal tax does not actually reduce the overall amount by much.

However it has a massive influence on peoples attitude and work behaviour and the energy the extra rewards release may well increase direct tax.

Jamie has the right direction while other parties have progressive taxation purely to catch the envy vote.

Visit Singapore or Hong Kong. It's mind boggling the influence a low flat tax has on peoples work behaviour.

17% would probably be viable if everyone paid... but APPLE and the like will still pay only 1.4%

I remember a few years ago Sir Roger Douglas outlined a budget similar to this. In his version there were no tax deductions for anyone, personal or business, and the IRD could be shrunk down to a miniature version of itself as a result.

As a result a company like APPLE that you says pays 1.4%, if you are correct, would now pay 17.5%. In other words, if it's true that businesses are paying next to nothing in tax the overall tax take would rise dramatically. This point isn't mentioned in ACT's budget policy and someone needs the ask Dr. Whyte to clarify this point.

Either way I think the policy looks good, but would be better with the removal of tax deductions.

Its a tragedy for this country, that Douglas was blocked from implementing his flat tax regime back in the '80s. I dream where this country would be now, so better late than never I guess. Mark me down as another new, Act voter

Just maybe its time for Ngai Tahu to be paying tax instead of the tax free status they enjoy.

Casting the tax nett over the privileged few could help bring the tax rate down to 24% and lower for everyone.

Just where do you get your claim from that Ngai Tahu are exempt from paying tax?

They operate under the disguise of a charity. They own shotover jet for example. Tax free.

Easy to see why you hide as Anonymous when you make such fatuous untruths. You only have to search under the Companies Office to see a wide range of numerous commercial Ngai Tahu companies. And charities are liable regardless for full taxation on any commercial activities. Why would you possibly suggest otherwise..???

A wide range of Ngai Tahu commercial companies. Yes you are right, commercial companies like Shotover Jet which operates free of taxation.

Imagine how all the fully taxed competitive operators feel about the privilege Ngai Tahu enjoys .Especially since it is their taxes that were used for so called compensation payments.

Similar to Sanitarium owned by a church etc etc. Suggest you give the charities commission a ring.

Shame he's not ACT's Epsom candidate as well. They've put some gifted toddler into that seat instead.

I agree with raising the age of super, but the rest of this alternative budget is absolute ideological tosh masked in the kind of buzz language that sounds good to the faithful but makes no economic sense when you bother to dig down. Most of the assumptions being made in regards to trade-offs, benefits and estimates are frankly embarrassing, unsubstantiated bulls--t that pays no regard any of the real data out there. It's almost like they just make this crap up!

What you call ideological tosh are the kind of policies that has enabled Singapore to increase their per capita income from one-tenth to twice that of New Zealand within two generations! That may be why Russia introduced a 13% flat rate of income tax in the aftermath of the collapse of the USSR and other East European countries have followed suit.

I'm not saying the policies won't work in the NZ context - they may / they may not. What I am saying is that to claim that these policies will achieve 5% LR growth when they can't really be bothered extrapolating the assumptions behind these policies by using real hard data and hard facts to show how (in the NZ context) is laughable. It's simply lazy and not good enough - puts them on the same level as all the other political parties I guess (sigh).

May I suggest that you read the budget proposed. All the costings are enclosed.

Slovakia removed multi layers of tax regulation and replaced it with across the board, flat tax of 19%.

I havent been there but I understand it kick started massive positive transformation. Singapore tax rate reaches 20% at 300,000 income.

You've got my vote too. Too many years of the same parties tinkering around the edges. Time to make a real positive difference and this budget will do it.

People may or may not agree with the direction of Jamie and ACT but at least they have a direction.

Surprised no one has fact checked this yet.

It looks like they have used the SOE values as at 30/6/2013. 49% or MEL and GEL have since been sold, plus part of AIR and Solid Energy has been deemed insolvent.

I am also looking forward to an economist to do their review of it.

The best thing is the level of detail, unlike Labours brain farts/policies.

This is all a bit meaningless without seeing the entire tax table Act proposes. Currently the tax on an income of $70,000 is $14,020 or 20%, so the initial steps would have to drop a long way to affect the average wage earner.

Think a bit further out. Its the man or woman who is going to pay the wages that we are after. The man or woman who will bring their company, invention or entrepreneurial skills here. Not only the wages but the higher wages and conditions.
NZ is so bogged down in mediocrity we cannot see how far sighted Jamie thinking would take us. We could and should be the top nation in the world.

I'm well aware of that, but the point it is the lower pay scales that will interest the majority.

I don't think ACT care about the average wage earner.

Does Jamie,
Believe in the tooth fairy, he must do with this garbage.

'Close the departments of Women's Affairs, Pacific Affairs and tourism'?
Epsom presumably still full of compliant non voting Stepford wives, no Polynesians, and given it has already signalled overtly chasing the Asian vote for no other reason than money, Act presumably doesn't see any point in tourism beyond free market highrollers at Sky Convention center either then?
Ah well after Banks convicted by the end of May, will not really be a party any other than the Dong hua Liu types will want to be associated with will it?
Less chance than KDC getting in, because these days of the Backhander boys and girls are coming to an end this year. People have had enough. You should have stayed In London Jamie, the accent grates and the sense of superiority reminds some of us how out of touch with real NZ beyond Remers some of you people are.

Please play the ball, not the man

Perhaps Epsom women think they're more than capable of looking after their own affairs, instead of needing a Dept. of Womens Affairs. How about you Jacqui, are you capable of looking after your own affairs or do you need the government to hold your hand because you're incapable of thinking for yourself? Who's the real stepford wife here, hmmm?

You probably think Pacific Islanders are just as stupid and need the govt. to look after their affairs also. Poor women and Pacific Islanders, too dumb to fend for themselves - is that what you mean Jacqui, or do you think they're grown up enough to look after themselves?

I can see why you don't like ACT, you have no faith in the ability of people to provide for and look after themselves, which is pitiful, and in the case of women and Pacific Islanders sexist & racist to boot.

Well done Jamie. You have my vote. Great to see ACT laser-focused again on lifting productivity to the benefit all New Zealanders. A focus rather lacking in our other political parties.

We are so drugged on our past. More government, more taxes, more welfare, welfare for everyone, more government departments, more policies of straight out election bribery.
We have created such dependence, such, we are owed thinking and expectations.
Jamie is promoting a bold new exciting direction. Changes that would never come from John Key. His total focus is on winning elections.
Jamies focus is independent and responsible NZ citizens. Doesnt mean there is no welfare. Its just that welfare will not be a way of life.

"Corporate Welfare"?

Right. Because even the most reactionary kiwis still have plenty of sympathy for impoverished bankers.

Keep going Jamie. You'll bury what's left of your party yet.

Cut the welfare for the wealthy too. Parental leave for those who need it, absolutely, not those with million dollar salaries.

Align the tax rates. Different rates for companies, trusts, individual is madness; either people try to game it, or IRD think they do.

Very refreshing Jamie, like a fresh cool breeze over the parched landscape of NZ tax policy. Gets me jazzed up about really growing my business.