Why Won’t Govt Give Families A Tax Break?

Media Release 26 August 2013
Family First NZ is questioning why the income-splitting bill has been shelved by the National-led government for over two years.

“The Taxation (Income-sharing Tax Credit) Bill was reported back from the Select Committee way back in March 2011 – yet there has been no sign of a 2nd Reading. Why won’t the government give families a tax break?” says Bob McCoskrie, National Director of Family First NZ.

“Income splitting allows families to make important work-life balance decisions without being financially penalised to the extent that they are when assessed individually. As property and welfare (including Working for Families) is assessed on a family unit – assessment of tax should also be on this basis. It is a fairer system and acknowledges the interdependence of the family unit.”

“Income splitting sends an important societal message that we value the choice of parents to raise their children full-time. For too long, the message has been that mums and dads should let the ‘professionals’ educate their young kids in day care, and parents should get out and get a real job,” says Mr McCoskrie.

In NZ, a married couple both working and on low incomes, or a family with a full-time parent are being penalised by up to $15,000 in their household income compared with a couple who separates or divorces. Low income families are being hardest hit by NZ’s ‘marriage penalty tax’ and poverty trap, according to calculations obtained from the NZ Institute of Economic Research (NZIER)

“Income Splitting is also a human rights issue – the right of predominantly women – but also men – who are full-time stay at home parents to be recognised as economic and productive units, contributing to the economy and welfare of the country. It recognises the contribution they make to society.”

Family First is calling on the Government to prioritise this bill on their legislative programme.

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