Wednesday, May 19, 2010

Budget lives up to expectations - with a few surprises

Finance Minister, Bill English today delivered the 2010 Budget that will see, among other things, income tax decreased and (as expected) GST raised.

In short, it could be said that the budget is more targeted at spenders, rather than savers.

Here is a rundown of the tax cuts in full:

From October 1, the top tax rate, payable on income above $70,000, will fall from 38 cents to 33. The 33 cent rate which applies on income between $48,000 and $70,000 will fall to 30 cents and the 21 cent rate, on income between $14,000 and $48,000, will fall to 17.5 cents.
The bottom rate, on earnings below $14,000, will be cut from 12.5 cents to 10.5.
Government estimates predict that the tax cuts will deliver just over $29.00 more a week to taxpayers earning around $50,000 per annum.

Superannuation, benefits and Working for Families will also be raised, in part to compensate for the rise in GST.

Mr English said that that tax reform was the 'centerpiece' of the Budget. The company rate will also be shaved off somewhat. The company rate will be cut from 30 cents to 28 cents next year.

The Budget also aims to prevent people from exploiting loopholes in the country's tax law:

From next year, property investors will no longer be able to claim depreciation on their buildings against their income and the values of assets held in trusts will be counted as part of a household's income when deciding eligibility for Working for Families.
The Government has estimated that unemployment will fall from 7.1% this March to 6.2% the next year and will continue to fall to 4.6% by 2014.
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