Objective:
This policy aims to transform New Zealand's tax landscape by gradually eliminating income tax, replacing GST with a flat, low-rate consumption tax, and phasing out Road User Charges (RUC) and Fuel Excise Duty (FED). The goal is to stimulate economic growth, enhance government efficiency, and increase disposable income for all New Zealanders, thereby addressing key economic challenges like the housing crisis without resorting to punitive measures like a capital gains tax. By reducing taxes on essentials like fuel, food, and electricity, and by ensuring that government spending does not outpace revenue, we intend to foster an environment where economic activity thrives without causing inflationary pressures. The immediate reduction of RUC and FED will directly lower costs on essentials, making everyday life more affordable. Importantly, these measures also increase the tax base as transactions rise for both personal and business activities for the new low rate consumption tax.

Policy Details:

We will raise the income tax-free threshold to $60,000, allowing individuals to keep more of what they earn. Income tax rates for earnings above this will be incrementally decreased by 5% each year until they reach zero, contingent on sustained reductions in government spending year-over-year, continued economic growth evidenced by GDP increases, measurable improvements in government efficiency, and the successful phased reduction of RUC and FED.

GST will be substituted with a 5-12% consumption tax, which cannot be claimed back by businesses, simplifying tax administration, and is applied only at the point of sale to the end consumer, avoiding the compounding of taxes through the supply chain. This flat tax encourages more transactions because it's lower and more straightforward, leading to an expanded tax base as both consumers and businesses increase their spending and investment.

GST will be removed from fuel, food, and electricity concurrently, to monitor and manage price stability while ensuring supply meets demand. As prices for these essentials decrease, consumer spending power increases, leading to more transactions and thus a broader tax base.

These taxes, RUC and FED, will be scaled back year by year until eliminated, directly reducing transportation and logistics costs, which is expected to lower the price of fuel instantly and reduce the cost of transporting goods. This not only makes goods cheaper but also stimulates more buying and selling, thereby expanding the tax base through increased economic activity.

By closely monitoring market responses, we will adjust the pace of these tax reductions to prevent inflationary spikes, ensuring supply keeps pace with demand. Government efficiency measures will include digital service enhancements, reduced bureaucratic costs, and increased productivity to fund these tax cuts. As efficiency rises, so does economic activity, further broadening the tax base.

Rather than taxing capital gains, this policy frees up more income for individuals, making housing more accessible by reducing the financial burden on households, encouraging savings, and potentially increasing investment in housing. More disposable income means more spending, which in turn means a larger tax base.

Each year's tax reductions will only proceed if government spending is lower than the previous year and below tax revenue, ensuring we maintain a budget surplus. This disciplined approach ensures that the increase in the tax base through more transactions supports government finances.

Campaigns will inform the public about these changes, highlighting the benefits of lower taxes on essentials and how they're designed to stimulate economic activity. As public awareness and engagement increase, so will the number of transactions.

We will review the economic impact, inflation, government efficiency, and consumer prices annually, making adjustments to keep the policy's objectives on track, including the growth of the tax base.

Conclusion:
This policy outlines a strategic shift towards a tax system that rewards economic growth, simplifies taxation, and directly improves the purchasing power of New Zealanders. By phasing out burdensome taxes in favour of those that are prosperity-based, we aim to create an inclusive, growth-oriented economic environment where both personal and business transactions flourish, naturally expanding the tax base. The immediate effect of reducing RUC and FED will lower the cost of essentials, contributing to a more affordable lifestyle for all, while the focus on spending discipline ensures long-term fiscal health. This approach not only addresses the housing crisis but also sets a foundation for sustained economic prosperity by broadening the tax base through increased economic activity.