April 1 changes boost wages and cut taxes
Today is a big day for government policy affecting Kiwis’ incomes:
- The minimum wage is now $12 an hour, up from $7 when Labour gained power.
- Youth rates have been effectively abolished, meaning young people will get the same pay for the same work.
- From today, employers must contribute to employees’ Kiwisaver accounts equivalent to 1% of their gross pay.
- The spilt up of Telecom has come into effect, increasing competition in the telecommunications sector and promising lower prices with greater internet speeds.
- The cap on tax rebates for charitable donations has been removed.
- The Family Tax Credit has raised affecting 2,400 families, Government superannuation has increased to 66% of the average wage, and student allowances have been risen to match inflation for the first time.
- The business tax rate is now 30%, down from 33%. Our rate is below many countries‘ including Germany, France, Canada, the US, Italy, Spain, and India, and on par with Australia. This is the first business tax cut since Labour was in government in the 1980s. National opposed this tax cut and most of the other policies listed here.
- A 15% tax credit on R&D spending has also come in to encourage research, leading to greater productivity.
The government has set the tone; it has put more money into business coffers and people’s pockets. Now, the challenge goes to business. Will they spend their tax cut on higher dividends and more low quality investment or on higher wages and high quality capital investment to boost productivity?
UPDATE [a_y_b]: The government has further info on the announcements here.