The Council of Trade Unions (CTU) was a lone wolf howling in the darkness yesterday, outnumbered by tax specialists who declared Finance Minister Bill English's budget as resilient as a house built from bricks.
Mr English had come up with a tax pac
The Council of Trade Unions (CTU) was a lone wolf howling in the darkness yesterday, outnumbered by tax specialists who declared Finance Minister Bill English's budget as resilient as a house built from bricks.
Mr English had come up with a tax package "that almost looks like white rabbits out of the hat", New Zealand Institute of Chartered Accountants Institute tax director Craig Macalister said.
It had not seemed possible to produce a tax package to please everyone, but Mr English came close, and may have reignited the economy in the process, Mr Macalister said.
Deloitte tax partner Thomas Pippos said the budget would create a solid platform for growth, by increasing GST, cutting personal tax rates, and removing tax bias in favour of property investment.
"Many of the changes, particularly personal tax cuts for all taxpayers, and tax cuts for corporates and savings vehicles are a huge step forward and will encourage economic growth," he said.
His view was echoed by other tax specialists, chambers of commerce and business interests, as outside Parliament only the CTU begged to differ.
It was fundamentally unfair, CTU economist Bill Rosenberg said.
Someone on $106,000 a year would get a tax cut 10 times that of a person on the minimum wage, Dr Rosenberg said.
"Even worse, someone on 10 times the minimum wage gets a tax cut of $153.92 a week, which is around $150 a week more than the person trying to get by on the minimum wage."
He did not point out a person on the minimum wage at present paid taxes of $74 a week, while a person earning 10 times that paid $1737. A couple on the minimum wage who had two children would pay no tax.
Combined with a reduced allocation for health spending, cuts in early education and education spending failing to keep up with inflation, and there were many areas of concern, he said.
The Government announced across the board personal tax cuts from October 1, amounting to $16.15 a week for someone on $30,000, to $89.04 for a person earning $120,000. With tax cuts estimated to cost $14.3 billion over four years, it opted to claw back revenue of $2.2b for that period by increasing GST to 15 percent, from 12.5 percent.
The company tax rate will also drop, from 30 percent to 28 percent.
Law firm Chapman Tripp labelled it "the biggest overhaul of the tax system since 1987", and one with the capacity to wean New Zealanders off their propensity to over-invest in property.
Mr Macalister said property developers would lament the clampdown on their ability to claim depreciation, it was hard to argue with the Government approach, even if the institute was "not entirely" in favour of the move.
If there was a flaw, it was the Government placing great store in Inland Revenue being able to collect an additional $745 million over four years, he said.
He doubted Inland Revenue would collect as much as budgeted, as it was possible those it chased down would have no money.
Changes to the tax treatment of investment property invited a behaviour change by New Zealanders away from investing in property to investing more in New Zealand and productive activity, Auckland Chamber of Commerce chief executive Michael Barnett said.
KPMG chief executive Jan Dawson called the tax initiatives the most wide reaching in 20 years.
Wellington Regional Chamber of Commerce chief executive Charles Finny said tax reforms would provide a solid platform for economic growth by increasing incentives to work, save and invest.
It was the fairest budget in more than a decade, Employers and Manufacturers Association chief executive Alasdair Thompson said.
Investment Savings and Insurance Association (ISI) chief executive Vance Arkinstall welcomed the tax changes, saying it was a step in the right direction, creating a platform for greater savings by New Zealanders.
