So much for “no new taxes”

This morning Grant Robertson unveiled a brand new tax on employment, to fund so-called “unemployment insurance”.

The “insurance” is essentially a pumped-up benefit. Labour wants to pay a massive 80 percent of prior income – up to $1820 a week – to those who become unemployed.

UE explainer

Needless to say, that is far, far more generous than existing benefits, and creates a perverse incentive to be made redundant, and to put off finding a job.

Why bother finding work when you can take a six month holiday on nearly full pay, courtesy of the taxpayer?

This policy is a productivity killer, and will increase unemployment. If you tax workers more, and then pay them more to not work, you’ll inevitably see fewer people working and more unemployed.

And the payouts don’t come cheap: two 1.39% levies on the worker and employer will effectively stack together as a 2.78% tax on income – an extra $1,580 per year for someone on the average wage.

The tax is especially unfair on the responsible hard workers with stable careers and happy employers. They’ll pay the tax but may not ever get the payouts.

We can stop this

We need your support to ensure Grant Robertson’s new tax turns into an election-losing issue for Labour.

In November we commissioned independent polling from Curia Market Research that asked respondents: Would you be happy to pay $1,000 a year more in income tax in return for a compulsory unemployment insurance scheme which would see someone made redundant receive 80% of their old salary for six months?

Only 31% supported the proposal, versus 42% opposed.

The Government will soon open a period of consultation on the scheme. With 165,000 subscribed supporters, we will swamp the select committee with submissions against the new tax, denying the Government the opportunity to claim public support.

And if the Government pushes ahead, we will ensure Labour is hounded during the election year over its failure to keep the “no new taxes” promise.

Unemployment insurance on Taxpayer Talk

Last week, before the details of the scheme were confirmed, Jordan sat down with Otago University economist Dr Dennis Wesselbaum to discuss the disturbing effects of social insurance policies on productivity.

Click here to listen to the podcast episode on how Grant Robertson’s unemployment insurance scheme is, as Dr Wesselbaum says, “against every lesson economists have learned” – and how unemployment insurance could be introduced in a more sensible way.

Louis circle
Louis Houlbrooke
Campaigns Manager
New Zealand Taxpayers’ Union