New Zealand Releases New Budget

May 24, 2012 Taxation in New Zealand

New Zealand Releases New BudgetWELLINGTON – The New Zealand government is tightening down on tax rules and eliminating inefficient tax rebates in order to ensure that the country reaches a budget surplus within three years.

On May 24th the Treasury of New Zealand revealed the latest national budget, outlying the government’s plan to build a more productive economy and to improve public services.

According to the Minister of Finance Bill English, who presented the budget, New Zealand is now on track to reach a budget surplus of approximately NZD 200 million within the next three years, and “responsible financial management” will be a key priority for the government in order to ensure that the country’s economy continues to expand.

Over the next year the government will aim to save NZD 109 million in tax revenues by closing tax loopholes which currently allow the expenses associated with purchasing and maintaining second homes to be deducted from personal taxes.

As a means of reducing inefficient tax benefits, the government will also remove currently available tax rebates on incomes under NZD 9 880 and tax credits for hiring housekeepers and childcare professionals. Cumulatively, the move is expected to save over NZD 117 million over the next four years.

In an effort to further boost tax revenues, the government will also introduce an annual 10 percent hike to excise taxes on tobacco products, which will be implemented on the January 1st over the next four year.

In the new budget the government has allocated an extra NZD 78.4 million to the Inland Revenue Department, to launch new audit and compliance initiatives, which will result in NZD 345 million in extra tax collections over the next four years.

Photo by Ed Kruger