The Kiwis Have a Plan

Don't let people find out about this Deval. They might want to move to New Zealand. Or worse! Douglas proposes parallel tax plan

Act MP Sir Roger Douglas is proposing a new low-tax option for taxpayers in which the first $30,000 of income would be tax-free - but only if they pay for their own retirement, health care and welfare insurance or costs.

Income over the $30,000 tax-free threshold would be at a flat tax rate - 15 per cent - to be phased in over 15 years.

The Douglas plan would cut corporate tax rates to the same 15 per cent.

Sir Roger outlined his opt-in proposal to the Orewa Rotary Club.

He would inflation-proof the tax-free income so the $30,000 threshold would rise at the rate of inflation.

But rates would vary for income-earners with dependent children: the threshold for a couple with one child would be set at $50,000.

Families would have a guaranteed minimum income, so that if they earned less than the tax-free threshold they would receive a tax credit up to the threshold.

The Government would create superannuation savings accounts for individuals under Sir Roger's parallel tax plan, and those in the low-tax option would be guaranteed not to receive less than under the old system.

Sir Roger said the system would help the poor more than the wealthy.

"The poor are forced to queue for health care, while the wealthy get it when they need it through private provision," he said. "Only by restoring responsibility to individuals will we be able to tame the increasing cost of Government services."

Provision of services would be controlled by the individuals rather than bureaucrats and there would be an incentive to keep costs down.

Service providers would have an incentive to serve customers and be innovative, "not capture politicians and bureaucrats through lobbying".

Sir Roger, a reforming finance minister in the fourth Labour Government, criticised the last Labour-led Government's policies as well as the claims by the present National-led Government that it represents limited government.

He said last year's election was a choice between more spending by Labour or more spending and lower taxes from National.

"We offer a third option: less spending and lower taxes."

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