Budget unveiled

Dr Greedy Cullen has unveiled his eighth budget. There are no big suprises. It involves a 10 cent increase in petrol tax for Auckland and Wellington, which will be used to pay for the eletrification of Auckland’s rail network and new roads. Also included is the cancellation of the “chewing gum” tax cuts anounced in 2005. This means that by 2008 14% of taxpayers will be paying tax at the top 39% tax rate, much higher than the 5% Labour promised in 1999. This is a promise they have failed to deliver on. On the positive side there is a cut in the company tax rate from 33% to 30%. However much of the money bussiness save from this will go to compulsory payments into their employees kiwisaver accounts. David Farrar has a good pst with tables on the changes to Kiwisaver, which involve the employee contributing 45 of his/her salary into kiwisaver, and for every dollar he/she puts in to his/her kiwisaver account, the government also puts 65 cents in. The employer is required by law to put an amount of money equaling 1.4% of their employees salary into their Kiwisaver accounts (once tax rebates are taken into account), effectively a 1.4% payroll tax. Also included is the abolition of the cap on chrity tax rebates, as advocated for by John Key earlier in the year. Overall this budget is a mixture of good and bad, but the bad outweighs the good.

Explore posts in the same categories: Budget 2007, Micheal Cullen

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