Yes

The problem at the moment is inflation increases wages by 4%, and prices by 4% (so in theory no worse off) but tax increases by 9-10% because some people move into higher tax bands.

I’m not sure of the exact numbers. the example I have seen modelled previously was 3% inflation was increasing the tax take by 8% per year (ignoring any growth etc), without any increase in tax rate;

Indeed, the adjustment I was thinking was a little less frequent than every quarter 🙂

I was thinking every 1-3 years, depending on the compliance costs of adjustment.

The main fact is that, if it is legislated, then parties can’t pretend they are cutting taxes when they are actually leaving the tax burden unchanged. As a result, the debate would have to focus on the optimal structure of taxes to raise funds for a given level of government spending – which should be the primary issue when discussing tax policy methinks

Presumably this would involve IRD changing the tax rates periodically (quarterly or annually say ) to adjust for the effects of inflation. This is not a simple task and involves reprinting all the guidance documents, reprogramming tax algorithms, businesses changing their payroll tax rates etc. The job of getting this done at short notice for the latest Labour tax cuts was pretty substantial (and therefore costly to the taxpayer).

Maybe the promise of doing this every three years would add some certaintly, remove some potential cost and get the correct inflation adjusted rate…albeit every three years.

True – and they are saying that they will leave real spending unchanged, implying that they have some concept of balancing budgets.

Of course, there is another party that offers a flatter, more efficient, tax system. 😉