Key points from the budget:• GST increases from 12.5% to 15% from October 1• Tax cuts: the 12.5% rate for income up to $14,000 drops to 10.5%; up to $48,000 drops from 21% to 17.5%; up to $70,000 from 33% to 30%; and over $70,000 from 38% to 33%
Key points from the budget:
• GST increases from 12.5% to 15% from October 1
• Tax cuts: the 12.5% rate for income up to $14,000 drops to 10.5%; up to $48,000 drops from 21% to 17.5%; up to $70,000 from 33% to 30%; and over $70,000 from 38% to 33% from October 1
• Corporate tax drops from 30% to 28% from April 1, 2011
• New spending of $1.1 billion. This is down from $1.45 billion in the last budget and is only going to increase by 2% from 2011-12.
• Reprioritised spending of $1.8 billion over the next four years – or about $450 million a year – with reduction comings from student loans, savings on administration in health and corrections, and moving underspent budgets around
• Operating deficits are expected to worsen but are improved on what was forecast last year. The total Crown operating balance (before gains and losses) is forecast to be in deficit by $6.9 billion this year, 3.7% of GDP. A peak of $8.6 billion is forecast for June 2011
• Economic growth forecast to pick up, from 0.3% of GDP this year into positive territory for 2011 – 3.2%. Forecasts for the following years are fairly stable – 3.1% in 2012, 2.0% in 2013 and 3% in 2014.
• Entitlement clampdowns: Working for Families tightened; property owners unable to use losses from rental income to reduce income, depreciation deductions not allowed on many properties, and changes to companies that own properties. Inland Revenue gets more to chase tax avoiders.
• Less new money for health than previous years at $488 million for each of the next four years.
• Education gets $900 million in new money over four years plus reprioritised funds accompanied by cuts to who can offer free early childhood education hours.
• Another $1.45 billion in capital spending in 2010-11, the second year of a five-year infrastructure building plan. This budget's funding would focus on broadband ($248 million), rail ($750 million) and prisons ($337.4 million).
