NZ Prime Minister Delivers Awaited Economic Speech

February 9, 2010 Taxation in New Zealand

DSC_7697In his first statement to the Parliament of the year, New Zealand Prime Minister John Key has outlined the Government’s intentions to focus on fostering economic growth for the country, indicating that several changes will be made to the national fiscal system.

At the first Parliament session of 2010, held on February 9th, John Key revealed the Government’s economic plans for 2010, emphasizing that attention will be paid to such issues as taxation, education, social services, resource and environmental issues, and constitutional matters.

As promised earlier this year, John Key disclosed his opinions on the recommendations brought forward to the Government by the Tax Working Group. In line with the Group’s final report, John Key has revealed that investigations are being held into the feasibility of raising the country’s Goods and Service Tax (GST) to as high as 15 percent. Although the Prime Minister strictly ruled out the possibilities of the implementing the comprehensive capital gains tax, land tax or risk-free return method on taxing investment properties, recommended by the Tax Working Group.

The Prime Prime Minister revealed his Government’s intentions to “flatten” the New Zealand tax scale progressively over the next few years. He hinted that personal taxes could be lowered across all pay levels, but especially for top-earners. Further, rises were possible for superannuation and Working for Families payments. The tax change package was promised to be a “significant” one, which would be revealed in whole at the release of the national budget in May.

The Government plans to impose tighter rules on individuals who receive a Sickness Benefit, and greater levels of training will be provided to those on the Domestic Purposes Benefit. In regards to education, the Prime Minister indicated that New Zealand schools will see a great swing in emphasis towards the teaching of practical and trade skills. The Government treatment of Universities would see an overhaul, and early childhood education would see improved support.

Photo by kelvinhu