Rewarding effort and hard work
Hon John Key
When I opened Parliament last week, I outlined the Government's programme for the coming year, including measures for a step-change in our economy. In 2010, we're focussing on growing the economy and ensuring our tax system is consistent with our founding principles; that it rewards effort, encourages savings, and helps families to get ahead.
Our current tax system relies heavily on taxes that are harmful to growth. It taxes labour and investment income at relatively high rates and taxes consumption at a relatively low rate. In Budget 2010, we will start reforming our tax system towards a fairer system that rewards hard work.
National is committed to reducing personal income tax and changing the way property is taxed. To offset this, the Government is considering a modest increase in GST to no more than 15 percent. However, we will also ensure that low to middle income earners are compensated for any increase in GST. Lower personal income taxes will ensure that hard work is rewarded. A modest increase in GST will encourage taxpayers to save their tax cuts rather than spend them, while providing for freedom of choice.
The Government is also committed to cutting red tape in order to make it easier for private enterprise to grow, invest, and create jobs. We plan to amend the Holidays Act, following the report from the Advisory Group set up to examine this area. We will ensure that other labour laws do not impose excessive costs on the country or hold back opportunities to create jobs. And we also share the concerns of many business owners about the fairness of personal grievance decisions, and will be releasing a discussion document on this topic later in the year. We want to see a greater return on the investment than many New Zealanders make in their businesses.
National also wants to make it easier for New Zealanders to sell their goods overseas so that more jobs can be created back home. In 2009, we signed free trade agreements with Malaysia and with the 10 countries of the ASEAN block. This year we will be signing agreements with Hong Kong, and with the economies of the Gulf Cooperation Council. The Government will also press ahead with important trade negotiations with India and Korea. New Zealand's future economic prosperity depends on these.
National is relentlessly focused on growing the economy and a fairer tax system. We will secure a brighter future for all New Zealanders if we stay true to our principles of individual responsibility, private enterprise, and reward for individual effort and hard work.
