ℕ𝕒𝕥𝕚𝕠𝕟𝕒𝕝'𝕤 𝕋𝕒𝕩 ℂ𝕦𝕥 ℙ𝕣𝕠𝕞𝕚𝕤𝕖: 𝕀𝕣𝕣𝕖𝕤𝕡𝕠𝕟𝕤𝕚𝕓𝕝𝕖, 𝕌𝕟𝕒𝕗𝕗𝕠𝕣𝕕𝕒𝕓𝕝𝕖, 𝕒𝕟𝕕 𝕌𝕟𝕨𝕚𝕤𝕖

𝕋𝕙𝕖 ℕ𝕒𝕥𝕚𝕠𝕟𝕒𝕝 ℙ𝕒𝕣𝕥𝕪’𝕤 𝟚𝟘𝟚𝟛 𝕥𝕒𝕩 𝕔𝕦𝕥 𝕡𝕣𝕠𝕞𝕚𝕤𝕖 𝕨𝕒𝕤 𝕚𝕣𝕣𝕖𝕤𝕡𝕠𝕟𝕤𝕚𝕓𝕝𝕖, 𝕝𝕖𝕒𝕕𝕚𝕟𝕘 𝕥𝕠 𝕦𝕟𝕒𝕗𝕗𝕠𝕣𝕕𝕒𝕓𝕝𝕖 𝟚𝟘𝟚𝟜 𝕔𝕦𝕥𝕤 𝕔𝕠𝕤𝕥𝕚𝕟𝕘 $𝟙𝟜.𝟟 𝕓𝕚𝕝𝕝𝕚𝕠𝕟. 𝔹𝕠𝕣𝕣𝕠𝕨𝕚𝕟𝕘 $𝟙𝟚 𝕓𝕚𝕝𝕝𝕚𝕠𝕟, 𝕔𝕦𝕥𝕥𝕚𝕟𝕘 𝕤𝕖𝕣𝕧𝕚𝕔𝕖𝕤, 𝕒𝕟𝕕 𝕣𝕚𝕤𝕜𝕚𝕟𝕘 𝕚𝕟𝕗𝕝𝕒𝕥𝕚𝕠𝕟 𝕤𝕥𝕣𝕒𝕚𝕟𝕖𝕕 ℕ𝕖𝕨 ℤ𝕖𝕒𝕝𝕒𝕟𝕕’𝕤 𝕖𝕔𝕠𝕟𝕠𝕞𝕪, 𝕦𝕟𝕕𝕖𝕣𝕞𝕚𝕟𝕚𝕟𝕘 𝕡𝕦𝕓𝕝𝕚𝕔 𝕚𝕟𝕧𝕖𝕤𝕥𝕞𝕖𝕟𝕥 𝕒𝕟𝕕 𝕗𝕚𝕤𝕔𝕒𝕝 𝕤𝕥𝕒𝕓𝕚𝕝𝕚𝕥𝕪 𝕗𝕠𝕣 𝕞𝕚𝕟𝕚𝕞𝕒𝕝 𝕙𝕠𝕦𝕤𝕖𝕙𝕠𝕝𝕕 𝕣𝕖𝕝𝕚𝕖𝕗.

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n 2024, New Zealand’s coalition government, led by the National Party, implemented personal income tax cuts as promised during the 2023 election campaign. 

These cuts, effective from July 31, 2024, adjusted tax thresholds to counter "bracket creep," where inflation pushes incomes into higher tax bands, benefiting around 3.5 million New Zealanders. 

However, the National Party’s election promise for these tax cuts was irresponsible, and their implementation was unwise and unaffordable due to fiscal, economic, and social consequences. 

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Related:

$𝟙𝕓 𝔹𝕦𝕕𝕘𝕖𝕥 𝕔𝕦𝕥 𝕔𝕠𝕦𝕝𝕕 𝕤𝕝𝕠𝕨 𝕖𝕔𝕠𝕟𝕠𝕞𝕚𝕔 𝕣𝕖𝕔𝕠𝕧𝕖𝕣𝕪, 𝕖𝕩𝕡𝕖𝕣𝕥𝕤 𝕨𝕒𝕣𝕟

𝕃𝕒𝕓𝕠𝕦𝕣 𝕧𝕤 ℕ𝕒𝕥𝕚𝕠𝕟𝕒𝕝: 𝕃𝕒𝕓𝕠𝕦𝕣’𝕤 𝕍𝕚𝕤𝕚𝕠𝕟 𝕋𝕣𝕚𝕦𝕞𝕡𝕙𝕤: 𝕎𝕙𝕪 𝕀𝕥’𝕤 𝕥𝕙𝕖 𝔹𝕖𝕥𝕥𝕖𝕣 ℂ𝕙𝕠𝕚𝕔𝕖 𝕗𝕠𝕣 ℕ𝕖𝕨 ℤ𝕖𝕒𝕝𝕒𝕟𝕕’𝕤 𝔽𝕦𝕥𝕦𝕣𝕖

ℂ𝕙𝕣𝕚𝕤𝕥𝕠𝕡𝕙𝕖𝕣 𝕃𝕦𝕩𝕠𝕟 𝕤𝕥𝕣𝕦𝕘𝕘𝕝𝕖𝕤 𝕒𝕤 𝕔𝕠𝕤𝕥-𝕠𝕗-𝕝𝕚𝕧𝕚𝕟𝕘 𝕘𝕝𝕠𝕠𝕞 𝕝𝕚𝕟𝕘𝕖𝕣𝕤

‘𝕎𝕙𝕪 𝕤𝕙𝕠𝕦𝕝𝕕 𝕡𝕠𝕠𝕣𝕖𝕤𝕥 𝕝𝕠𝕤𝕖 𝕛𝕠𝕓𝕤 𝕥𝕠 𝕘𝕖𝕥 𝕚𝕟𝕗𝕝𝕒𝕥𝕚𝕠𝕟 𝕕𝕠𝕨𝕟?

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The National Party’s campaign pledge to deliver tax relief was framed as a solution to cost-of-living pressures but ignored New Zealand’s precarious economic state. 

The country faced two technical recessions in 2023, with Treasury forecasting a 0.2% contraction for the year ending June 2024. 

Corporate tax revenue had already dropped 11% since late 2022, contributing to a $6.1 billion fiscal deficit for 2024/25, $1.8 billion worse than expected. 

Promising tax cuts costing $3.7 billion annually—$14.7 billion over five years—without a clear funding plan was fiscally reckless. 

Critics, highlighted that the government resorted to borrowing an additional $12 billion over the forecast period, contradicting Finance Minister Nicola Willis’s assurance that borrowing would not fund tax relief. 

This increased debt, pushing the budget surplus out to 2027/28, underscored the irresponsibility of the promise, risking long-term fiscal sustainability. 

Economist Shamubeel Eaqub on Radio NZ (RNZ) Morning Report 30/04/25. courtesy: RNZ

Economically, the tax cuts were poorly conceived. Independent economist Shamubeel Eaqub noted that the relief, such as $9 fortnightly for low-income earners, merely offset six months of inflation, not the 21.5% rise in household costs since 2020. 

The modest benefits failed to justify the fiscal strain, especially as Treasury warned that increased household spending could fuel inflation. 

The OECD cautioned that debt-financed tax cuts, as promised by National, could prolong high interest rates, undermining the Reserve Bank’s efforts to stabilize prices. 

This inflationary risk negated the cuts’ intended relief, making the promise shortsighted and economically destabilizing. 

The funding strategy further exposed the promise’s flaws. 

The government offset costs with $4.86 billion in savings, including $1.2 billion in public service cuts and the axing of Labour’s initiatives, like the "Fees Free" tertiary scheme. 

These measures strained essential services, with Health NZ facing a $1.76 billion deficit and infrastructure like hospitals and ferries underfunded. 

Social media posts criticised the prioritization of tax cuts over public investment, especially as unemployment rose and worker tax revenue fell. 

Promising tax relief without acknowledging these trade-offs was irresponsible, as it masked the inevitable erosion of public services. 

In conclusion, the National Party’s 2023 election promise for tax cuts was irresponsible, prioritizing political appeal over economic reality. 

The resulting policy, implemented in 2024, was unwise and unaffordable, exacerbating fiscal deficits, risking inflation, and undermining public services.

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Additional Reading:

𝕋𝕙𝕖 𝕋𝕣𝕖𝕒𝕥𝕪 ℙ𝕣𝕚𝕟𝕔𝕚𝕡𝕝𝕖𝕤 𝔹𝕚𝕝𝕝 𝕕𝕖𝕒𝕕. 𝔸 𝕝𝕖𝕤𝕤𝕠𝕟 𝕠𝕟 𝕙𝕠𝕨 𝔸𝕠𝕥𝕖𝕒𝕣𝕠𝕒 𝕔𝕒𝕟 𝕞𝕒𝕥𝕦𝕣𝕖.

𝕃𝕦𝕩𝕠𝕟’𝕤 𝕃𝕠𝕨 ℙ𝕠𝕝𝕝𝕚𝕟𝕘 ℂ𝕒𝕤𝕥𝕤 𝕊𝕙𝕒𝕕𝕠𝕨 𝕠𝕟 𝕁𝕠𝕙𝕟 𝕂𝕖𝕪’𝕤 ℂ𝕣𝕖𝕕𝕚𝕓𝕚𝕝𝕚𝕥𝕪

ℕ𝕒𝕥𝕚𝕠𝕟𝕒𝕝 𝕡𝕒𝕣𝕥𝕪 𝕡𝕠𝕝𝕚𝕔𝕪 𝕕𝕖𝕥𝕣𝕚𝕞𝕖𝕟𝕥𝕒𝕝 𝕥𝕠 ℕ𝕖𝕨 ℤ𝕖𝕒𝕝𝕒𝕟𝕕𝕤 𝕖𝕔𝕠𝕟𝕠𝕞𝕚𝕔 𝕨𝕖𝕝𝕝𝕓𝕖𝕚𝕟𝕘

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The National Party’s 2023 tax cut promise was irresponsible, leading to unaffordable 2024 cuts costing $14.7 billion. 

Borrowing $12 billion, cutting services, and risking inflation strained New Zealand’s economy, undermining public investment and fiscal stability for minimal household relief. 

The National Party’s claim of fiscal responsibility was undermined by 2024 tax cuts, which required $12 billion in borrowing and $4.86 billion in service cuts. 

This increased deficits and delayed surpluses, contradicting prudent financial management for short-term political gain.

The promise’s failure to account for New Zealand’s economic challenges left the country financially vulnerable and poorly equipped for future needs.

𝗢𝗽𝗶𝗻𝗶𝗼𝗻: 𝔅𝔯𝔲𝔠𝔢 𝔄𝔩𝔭𝔦𝔫𝔢

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