RADIO NEW ZEALAND: Finance Minister Michael Cullen delivered his ninth Budget in Parliament on Thursday, announcing a $10.6 billion package of tax cuts over four years, to start from October 2008.
Dr Cullen presented his Budget with the Government languishing in the polls and facing the prospect of a heavy defeat in the election later this year.
Prime Minister Helen Clark says this year's Budget was drawn up against a backdrop of a slowing international economy.
Miss Clark says that last occurred in 1998 under a National government, which cut superannuation, sold Contact Energy and under-invested in health and education.
She says the Budget balances the need for tax relief and the need to maintain investment in critical public services such as health, education and housing.
The National Party says tax cuts announced are "too little, too late."
Personal tax cuts
Apart from a new low tax rate, there are no changes to other rates, with cuts being delivered through income threshold adjustments.
From 1 October, earnings up to $14,000 will be taxed at the new rate of 12.5%.
The next band of earnings up to $40,000 will be taxed at 21%, moving the threshold up from $38,000.
The threshold for the 33% tax rate will move from $60,000 to $70,000.
Earnings over $70,000 will be taxed at 39%.
From 1 October this year, all thresholds rise and move up again in 2010 and 2011. People will get an average of $12 to $28 a week extra, rising to between $21 and $55 a week in 2011.
Dr Cullen says he is confident the tax cut package will not add to inflationary pressures. He says recent disappointing employment figures, and declining retail and housing figures are signs inflation is cooling.
Dr Cullen says the Treasury predicts with the tax cut package, the Consumer Price Index will be back within 1% to 3% over the forecast period.
He says the tax cuts will enable the Government to keep debt at around 20% of gross domestic product.
Working for Families payments boosted
The Government has also brought forward increases to Working for Families payments to adjust for inflation, worth $1.1 billion over four years.
The Family Tax Credit will increase, which will benefit all eligible families.
The family income threshold for Working For Families will also be increased. For any income over $35,000 a year, there will be a $7-a-week increase to the tax credit.
Under the changes, a one wage family on $45,000 a year with two young children will get an extra $30.83 a week from this October, rising to $62.82 in 2011.
Health and education
In health, the Government has committed extra, ongoing, annual funding of $500 million a year to cover the pressures of population growth and rising costs faced by District Health Boards.
DHBs will also receive $170 million over four years for better regional and national collaboration.
In education, $215.5 million has been committed to reducing class sizes for five-year-olds, providing one teacher to 15 new entrants. There is also $63.6 million to lower early childhood education fees.
In tertiary education, students will be able to borrow an extra $5 a week for living costs, and more students will be able to get allowances.
Other major annoucements
Police will receive an extra $180 million in operational funding, and $9.5 million for more police staff, as part of Labour's support agreement with NZ First.
In communications, $325 million will go towards the fast roll-out of broadband, targetting businesses, schools, universities and extending into rural areas.
Budget details: http://www.radionz.co.nz/news/special.
Posts
No comments:
Post a Comment