French tax

Dramatic market reaction to UK tax cuts doesn’t scare Christopher Luxon from offering relief in New Zealand

“We must offer tax relief”

Global currency markets are experiencing high volatility and the New Zealand dollar has fallen to its lowest level since 2020.

“There are winners and losers, yes it’s great for our exporters but it’s harder for our importers and it drives up prices that way.

“The big issue is we need a plan to manage inflation, we need to be able to control spending, we need to be able to deliver tax breaks.”

However, market reaction to the recently announced UK tax cuts saw the pound fall to an all-time low against the US dollar.

National said there would need to be a tax cut plan for the 2023 election and Luxon said that hasn’t changed despite some markets viewing the tax cuts as making inflation problems worse.

“The UK is incredibly different from our own plan.

“What you have in the UK is a tougher economy, frankly, as a starting point. You have massive stimulus spending going on and you also have massive fiscal change basically going on.”

Luxon said National is focused on adjusting tax brackets for inflation and cutting wasteful spending.

Asked repeatedly by Morning Report whether his government would consider borrowing to carry out its tax-cutting plans, Luxon said that was a separate question.

“We are saying very clearly that we believe there is a way to provide tax relief so that people can keep money in their pockets.”

Borrowing was “a separate issue,” he said, and National would run for an election with a fully costed plan and seek to cut spending.

“We’re going to go through spend line by line and make sure it’s not wasted and as a result we believe we can deliver much more efficient spend that produces results.”

“We believe we can provide tax relief on a very simple principle, as many countries around the world do, which is inflation-adjusted tax thresholds.

“It’s the best way to give people cash in hand compared to the rinky-dink cost-of-living payments paid to French backpackers.”