Alliance finance and taxation spokesperson Professor Jim Flynn says one of the key goals of the Alliance is to restore a fair tax system based on ability to pay.

"Under an Alliance Government, a total of $3.57 billion dollars extra will be paid by the top 33%, particularly those who earn over $100,000 per year, but we give tax relief to the bottom 67%. The break-even point will be $41,000, that is, a family with two wage-earners each making that amount will pay no more tax."

Professor Flynn says the budget would see a new deal for pensioners and beneficiaries

"The first $10,000 of income would be exempt from tax. This applies to everyone, but it would most benefit those on low incomes. Adjustments will be made so that those on Government superannuation and benefits are included."

The Alliance tax plan would also provide a massive boost for low income New Zealanders struggling to make ends meet, says Professor Flynn.

"Almost 900 thousand Kiwis who earn between $10,000 and $20,000 would average $1400 less tax than they do now. Another 700,000 would enjoy substantial tax breaks. Those on $25,000 would pay $980 less and those on $35,000 would pay $430 less. Up to $34,000 (60% of Kiwis), our tax relief for low income earners would be more favorable than that offer by Labour effective 1 October 2008."

The Alliance is the only party outside of government to spell out where the money to cover its promises will comes from.

Professor Flynn says Alliance income tax is part of a total package that will finance extra spending of $6.12 billion per year.

"Of this, $1.545 billion would come from income tax, and another 1.375 billion mainly from higher taxes on casino profits, a carbon tax, restoring the land tax abolished in 1992, and inheritance taxes at 20 cents in the dollar beginning at $500,000. We would introduce a Capital Gains Tax modeled on Australia's that would afford another $1 billion."

"The rest would come from stopping payments into the Superfund ($2.20 billion). Those payments are starving social spending and blighting New Zealand's future. A healthy, well-educated, fully-employed people is the best guarantee we can support the elderly in dignity."

Professor Flynn says the Alliance tax plan would fund an ambitious social programme to lift the living standards of New Zealanders.

"This $6.12 billion of extra income would fund free tertiary education, universal student allowances, abolition of school fees, 22,000 state houses over three years, and a universal child benefit of $15 per week. The Alliance would also treat a set percentage (rising over three years) of GDP as a dedicated 'Towards first world health' fund. This would add around 1.4 billion dollars to the projected health vote."

"It would pay for free doctor visits, no prescription charges, reduced waiting lists, and meeting urgent needs in mental health, aged care, and disabilities. It would provide free hearing and eye tests and free dental check-ups."

Professor Flynn says the removal of GST is essential to create a fairer tax system.

"The Alliance would gradually replace GST, starting with essentials such as food, and put in its place a financial transactions tax (FTT) at the low rate of 2 cents per $100. The FTT would be charged on withdrawals only, not deposits. If you spent $29,000 per year and withdrew a weekly total of $560, FTT would be 11 cents. Compare that to GST on a family's weekly food bill - 12.5% of $200 or $25 a week."

"GST is a regressive tax that hits the poor at the same rate as the rich. It burdens business with unnecessary compliance costs. The Alliance is committed to the kind of progressive tax system that existed in New Zealand before Labour and National decided to benefit the wealthy and attack the most vulnerable."

Key points for Alliance tax plan for New Zealand

• First $10 000 income tax free
• Immediate removal of GST on food and phase out of GST over time
• Less tax for low to middle income earners on progressive tax scale
• Introduction of Financial Transactions Tax
• Introduction of Capital Gains Tax (family home exempt)
• Introduction of inheritance tax and reintroduction of land tax
• Stopping payments into Superfund
• Taxes would fund free education, universal student allowances, a major boost to public health spending including free doctor visits and no prescription charges, universal child benefit, abolition of school fees, and investment in housing and infrastructure.

For further information contact Professor Jim Flynn on (03) 4798668 (work) or (03) 4667024 (home) or email jim.flynn (at) stonebow.otago.ac.nz