Tax cuts locked in, but social services and wages still matter - CTU

CTU MEDIA RELEASE 

22 May 2008 

“Workers are feeling the pinch with high food prices, rising petrol costs and high rents and mortgage payments, and tax cuts announced today, targeted at low and middle income earners, will clearly be welcome for many workers,” Council of Trade Unions vice president Richard Wagstaff said today.

“But tax cuts can’t patch up for low wages, and with workers having some certainty now on the size of tax cuts, the acid is now on employers to lift wages.” 

“The wage gap with Australia cannot be closed by tax cuts. It requires ongoing wage rises for New Zealand workers and it does not help workers or the economy if employers try to avoid decent pay rises because take-home pay has gone up through lower tax.” 

“This Budget shows that even reasonably modest tax cuts still cost a lot of money. About $2.7 billion a year is needed to deliver tax cuts that start at $12 to $28 a week and rise to $22 to $55 a week.” 

“This means less money is available to build on the improvements in social services we have seen in recent years. Unions are therefore concerned about the long term impact of these tax cuts on the social spending.” 

Richard Wagstaff said that the focus on the Budget is mainly about personal tax cuts but the CTU also welcomes the earlier increase to family tax credits worth $275 million a year, the $168 million over 4 years for language, literacy and numeracy, broadband investment and funding to reduce the class sizes for new entrants to one teacher per 15 pupils.