Oh dear!

Phil Goff has made his flagship "State of the Nation: speech this afternoon where, predictably, he has foreshadowed tax increases for higher income earners; as Guyon Espiner has just said "That's what you'd expect from a Labour Government."

He's also foreshadowed a policy whereby the first $5000 of everyone's income is tax-free. That sounds great, until you look at the detail of the proposal; there isn't any, as Idiot/Savant at No Right Turn notes (our emphasis added):

Phil Goff gave his "state of the nation" speech today, aimed at launching Labour during election year. Last year, he targeted inequality, focusing on the need to narrow the gap between rich and poor. Today he gave some details about how Labour plans to do that. Their first step? A $5,000 tax-free bracket, to be paid for by cracking down on tax avoidance and restoring the top tax bracket. It's good, redistributive, left-wing policy. The problem is that Goff's numbers on how to do it don't add up.

According to Treasury's 2010 tax model data, a $5,000 tax-free bracket would cost $1.58 billion (10.5% of all income in the zero - $5,000 range). Reintroducing a 39% top tax-bracket on "incomes comfortably into six figures" would claw back only $290 million if the threshold is $150,000, or $558 million if it is $100,000. Which means that 60 - 80% of the threshold will be paid for by reducing avoidance. Goff's statement that

No one knows exactly how much is lost by people dodging their tax - but it’s been estimated in the billions.

is carrying an awful lot of weight here.

Oh dear! How is Phil Goff going to win the hearts, minds and votes of those who DON'T support Labour when the shortcomings of his policy are so blindingly obvious to those who do? It's going to take more than a makeover Phil ...