National leader Christopher Luxon is calling for the Government to give struggling Kiwis tax relief as the cost of living rises.
The cost of living has increased by more than 11.5 per cent in the past four years.
The rate of inflation in the December 2020 quarter to the December 2021 quarter was at 5.9 per cent - the largest annual increase in more than 30 years, according to a Statistics New Zealand report released in January.
In a State of the Nation speech on Sunday Luxon announced National would cut taxes if in government.
He said inflation is at a 30-year high as the cost for necessities including food, petrol and housing all see increases.
“The average Kiwi family is worse off than they were 12 months ago and the Government needs to act,” he said.
Luxon said one of the “hidden costs” of inflation is “bracket creep”, with earners paying more tax due to inflation.
“Someone on the average wage now has a marginal tax rate of 33 per cent. That’s not right.”
He called for Finance Minister Grant Robertson to adjust the bottom three income tax thresholds at the upcoming Budget 2022 “to account for the inflation we’ve seen in the last four years under Labour”.
“A family with two adults on the average wage would benefit by over $1700 a year. Someone earning $55,000 a year would pay $800 less tax. Everyone earning over $78,100 would be better off by over $1000 a year. In addition, the couple rate for NZ Super would go up by $546 per year on top of the scheduled increase this April.
"Anyone earning over $14,000 or receiving NZ Super would be better off as a result of these changes. No one will get rich, but they will make things a little easier for Kiwis struggling with the rapidly rising cost of living.”
Luxon said the changes “would not put further pressure on inflation or require spending cuts in areas like health and education”, but “simply require Labour to be slightly less profligate with its new spending in Budget 2022”.
In mid-December the Government set aside $6 billion extra for the 2022 Budget, with the extra funding to go towards the health system and climate change.
Luxon went on to say: “Even after accounting for the $1.7 billion cost of these tax cuts, the remaining $4.3 billion would still be the biggest allowance for new spending initiatives ever.
“It’s time for the Government to stop its massive tax grab. They need to take action and deliver tax relief to hard working Kiwis struggling under a cost of living crisis.”