By Brook Sabin
3 News has obtained figures which show higher income families are claiming tens of millions of dollars in tax credits, under Working For Families.
The Government is considering cutting back the scheme following the Christchurch quake, and will release details at next month’s budget.
But one economist says the figures show scope for saving half a billion dollars every year.
The two Canterbury earthquakes are estimated to cost the Government around $10 billion, so cuts are looming at next month’s budget.
The $2.5 billion Working For Families package is in the firing line – especially for those on higher incomes.
So how much do higher income earners cost us?
“I don’t want to go into specific details about that scheme or other changes to the budget today,” Prime Minister John Key says.
But 3 News has obtained the details for 2009 – the latest data available.
It shows:
- Those with a household income of between $60,000 to $80,000 claimed $240 million on Working For Families tax credits
- While those on $80,000 to $100,000 claimed $55 million
- Families on more than $100,000 claimed $10 million that year in tax credits.
“Working For Families does some important and good things – it relieves child poverty and gets solo parents into work – but at the same time it’s not very well targeted, so a lot of money goes to the wrong type of people,” says Jean-Pierre de Raad of the NZ Institute of Economic Research.
While Mr Key won’t confirm cuts are on the way, he does suggest the Government is seriously considering it.
“Working For Families has a reach into very high income levels. Granted, people have to have quite a lot of children before they can get into that level of support, if they have higher incomes. I think, given the changes to the tax system and the likes it is legitimate for us to look at that area,” he says.
Critics say the Government would have to significantly reduce eligibility to make any big savings.
“The amount of money that can be saved by the small number of people with many children at the top is peanuts, the vast bulk of expenditure of Working For Families is on families who need it,” says Labour leader Phil Goff.
But the NZIER argues there is scope for huge cuts.
It classifies struggling families as those on less than $50,000 and says if the Government restricted the scheme to them, it’d save $540 million a year.
“We have to find ways of better spending the money that we spend,” says Mr de Raad.
“One way is to look at poor performing programmes – and I think Working For Families is one of those.”
But in an election year, commentators say, big cuts to the scheme which would affect tens of thousands of families are unlikely to happen.
3 News