5 point economic plan for New Zealand

For voters' information, here is some useful background on the NZ economy: http://www.treasury.govt.nz.... You might also want to see this epic graph of the New Zealand government budget: http://wheresmytaxes.co.nz....The Lars Plan for the New Zealand economy:1. Index tax brackets to the rate of inflationThe phenomenon known as "bracket creep" is a well-known problem in economics, and a side-effect of inflation. In the past, accountants have been reluctant to index tax brackets because of the extra hassle this would cause. My plan would be to index each year's tax brackets to the inflation rate of the previous four quarters, as reported by the Reserve Bank. The adjusted tax brackets would be published jointly by the Ministry of Revenue and the Treasury, at least one month before the relevant taxes are due. This could then be automatically updated by accountants in their spreadsheets and personal accounting software in their databases. For people filing their own personal returns, the tax brackets could be printed at the top of the physical forms by the Ministry of Revenue, and for people doing returns online, the relevant tax bracket could be automatically calculated by the computer system.2. Increase income tax on the richWhen he became prime minister of New Zealand, John Key introduced a series of tax cuts on income tax and an increase in goods&services tax (GST). To pay for this there has been a massive increase in borrowing. The problem with this is that the very poor did not recieve a tax cut, only the very rich did, and besides that our country is in enough debt already. My plan would be to restore income taxes to how they were before the John Key tax reforms. This has the effect of making taxes more progressive, while relieving us of debt. The top 9% of earners got a 5% tax cut - the bottom 9% had their taxes increase due to GST. We have the second-lowest personal tax burden in the OECD - the rich can reasonably be expected to pay more. All the other OECD countries seem to thrive with more progressive taxes, with the only country having a lower burden being Mexico, and they're not exactly a model state of economics.3. Swap interest-free student loans for student allowancesThe problem with interest-free student loans is that the government always loses money on them - they are borrowed at interest by the government, loaned by the government to the students at no interest, and then guess who pays for the interest? The government does. But that interest isn't going to anyone - it's a deadweight loss. So rather than paying for all that interest, I would put interest back on student loans and increase the availability of student allowances. This would be coupled with the introduction of a more robust system for determining student allowance eligability, including the introduction of a "parental mandatory expenses" test, so that children whose parents are unable to support them through college due to having a large morgage or similar can be given help. Like with student loans, I would restrict the student allowance to only include students who achieve fair grades for their ability level and who don't become "lifetime students". This is all good for the economy because it means the government is spending its education budget on things that are actually going to improve New Zealand's future, and good for students as it means that those who need help can get it.4. Abolish the New Zealand Defence Force and Ministry of DefenceI've argued this at length in previous debates - there is not one good reason for us to maintain a defence force, particulary one as crappy as the one we have now. I've done calculations that abolishing the defence force would save the government at least 3% of their expenditure every year (as it so happens, our budget deficit is about 3.3% right now), which is about $1.6 billion in US$ terms, plus all the money that can be procured from selling our crappy weapons, ships and aircraft (though I would transfer some of this stuff to departments such as Search and Rescue who can actually put it to good use). This can help our government get back to surplus faster, and helps the tourism industry as more land is freed for national parks.5. Introduce a Capital Gains TaxThis was a major talking point at the last election. We technically have one but nobody ever enforces it, and it's easy to circumvent. We need to start enforcing our policy, and close the loopholes. A capital gains tax is good for the economy because it helps raise revenue for the government, and reduces income inequality as the rich cannot hide their wealth in assets. The tax is generally considered fair by economists and has been adopted by most other important countries. I would spend all the revenue gained from this tax on tax credits and grants to small businesses, both to encourage entrepreneurship and reduce unemployment.That's my five points on a very broad level - I actually have many more ideas but these are the ones I'm most comfortable arguing. I look forward to reading con's alternative policy.