Average income households will get a tax cut of up to $102 per fortnight from the end of July this year – a tax cut plan in line with what National promised in the election.
The coalition government’s tax cuts have been revealed after the release of Budget 2024 documents this afternoon.
The tax plan – which includes the reinstatement of interest deductability for landlords – averages $3.7 billion a year. It will be funded through savings and revenue initiatives, including public service cuts of $1.2 billion, cancelling some of Labour’s initiatives, and switching the tertiary education ‘fees free’ programme from the first year to the final year of study.
Finance Minister Nicola Willis said that meant tax cuts would not require additional borrowing and wouldn’t be inflationary.
A tax calculator is available at budget.govt.nz/taxcalculator
The package will reach 3.5 million New Zealanders – 83% – according to Budget documents.
Eligible families will also receive a FamilyBoost childcare payment of up to $150 per fortnight – a policy previously announced.
Households with children will get, on average, $78 per fortnight, while working-age New Zealanders will get $32 a fortnight on average.
Finance Minister Nicola Willis said it meant New Zealanders would get their first tax cuts in 14 years, something she said was “well overdue” and would help hardworking Kiwis who were enduring “a prolonged cost of living crisis”.
In her speech, the Finance Minister said the Government's job is to help economic recovery, not hinder it. (Source: 1News)
Families with young children targeted
The Government’s tax package targets relief to low and middle-income households. Families with young children are set to benefit most.
“Our Government was elected to give a fairer deal to hardworking New Zealanders and the tax package we are confirming today delivers on that promise.”
The Government would raise income tax thresholds – a move Willis said was aimed at compensating for wage growth.
It would also expand eligibility for the independent earner tax credit, introduce FamilyBoost and increase the in-work tax credit for low and middle-income working families.
A total of $1.2 billion has been allocated over the next three years, Cushla Norman reports. (Source: 1News)
“A single person earning $55,000 a year will be better off by about $51 a fortnight.
“The changes to the in-work tax credit and FamilyBoost tilt the benefits of the tax package strongly to low-to-middle income working families with children.”
“The design of the tax plan we are announcing today aligns with the National Party tax plan with some adjustments to reflect coalition agreements.
“As agreed in the National-NZ First agreement, the Government is not progressing the foreign buyers’ tax. Instead, we have increased funding for IRD tax audits and oversight work, generating extra revenue and ensuring greater fairness and integrity in our tax system.
Nicola Willis revealed the National-led Government's first budget in Parliament today. (Source: 1News)
“The agreement to stop first year ‘Fees Free’ and replace it with final year ‘Fees Free’ has also contributed additional savings which will help fund tax relief.
“As agreed in the National-Act agreement, I engaged closely and constructively with ACT leader David Seymour on the idea of flattening the tax scale,” Willis said.
“This has a lot of merit but was not possible to achieve in a way that benefitted people as the National plan did. It remains, however, an idea for the future. “
Public service funding
Budget 2024 also includes a funding boost to health of more than $16 billion over four years, $2.9 billion for education over four years, $1.1 billion for disabled people over five years, $651 million for police over four years, and $1.2 billion over three years for a Regional Infrastructure Fund.
Kapa haka festival Te Matatini would also get long-term funding of $48.7 million from 2025 to “ensure” its future, Māori Development Minister Tama Potaka said.
Universal free prescriptions – a main feature of the Labour Government’s final Budget – will be scrapped, instead offered only to under 14s, community service card holders and over-65s.
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