[NZ] Budget 2010

While I was in a seminar sharing my uninformed views of writing in late-medieval China, the latest New Zealand budget was announced. It coincided nicely with the University's fortnightly pay day.

To summarise the key points:

• Property depreciation will no longer be eligible to offset against income
• GST up from 12.5% to 15%

• Adjusted income tax rates:
o $0-$14000 at 10.5% (down from 12.5%)
o $14001-$48000 at 17.5% (down from 21%)
o $48001-$70000 at 30% (down from 33%)
o $70001+ at 33% (down from 38%)

• Additionally, the business and PIE (Portfolio Investment Entity) tax rates will drop to 28% (from 30%) while trusts remain at 33% (in-line with the top tax-bracket).

• Student allowances, superannuation, benefits etc will increase by 2.2% to offset the GST hike.


Overall, sizeable income tax reductions will more than offset the increased cost of living due to the GST hike. It certainly encourages saving and investment (particularly investment in something other than property) which is currently somewhat lacking in New Zealand. It is important to remember that the GST increase will not apply to things like rent and mortgage payments, or any interest/dividends you earn from savings.

In essence this is very much a pro-capitalist National budget. Where does this leave the socialist conveniences of the welfare state? Additional spending has been announced for the healthcare and education sectors, as well as infrastructure, particularly ultra-fast broadband (yay) and rail networks (good luck with this).

Bearing in mind that various governments, including New Zealand's, are trying to reduce deficit (particularly with the situation in Europe getting progressively worse, and the potential 2012 financial crisis looming), this is one of the better budget announcements in recent years. It provides for more taxation fairness (certainly a good thing), and reduces tax evasion by funneling income through trusts while qualifying for state support. It additionally encourages savings and investment, both foreign and domestic - particularly because Kiwi Saver is still intact.

Personally I don't have a problem with paying tax, as long as the money isn't being squandered and I can see tangible gain, either to myself or the country. I support the idea of a capital gains tax, and compulsory retirements savings/insurance. But on the other hand, I'm not going to complain about a bit of extra money every pay day.