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Budget details “leak”

Written By: - Date published: 11:03 am, May 23rd, 2017 - 48 comments
Categories: budget 2017 - Tags: , ,

Richard Harman at Politik on core points of the budget:

Exclusive: What will be in Joyce’s Budget

A “Families’ Income Package” is likely to be at the core of this week’s Budget.

Sources close to the Government have “leaked” details of the Budget to POLITIK.

Finance Minister Steven Joyce has been signalling for some time that the Budget would involve movements in the tax thresholds.

POLITIK understands that the movements will be for the two lowest thresholds.

Currently tax on income up to $14,000 is 10.5% and for income from $14000 – $48000 tax is 17.5%.

Those thresholds will both rise.

There will also be changes to Working for Families and an increase in the Accommodation Supplement.

POLITIK has been told that added together the tax threshold and Working for Families moves could mean families where one parent is in work with two children see their income rise by what is being described as a “significant” weekly figure.

Key suggested a “meaningful tax cut” of about $20 a week to people earning around $68,000 a year would cost about $3b.

That has been rejected.

POLITIK understands that by concentrating the cuts on the lower tax thresholds, the increase per person will be significantly higher than $20 a week for those lower income earners. …

Plenty more details at Politik.

48 comments on “Budget details “leak””

  1. Ad 1

    Looking forward to seeing Robertson make his mark against this budget.
    It’s sounding more Labour with every announcement.

    • Bunji 1.1

      Must be an election near, time for National to roll out some Labour policies… (before returning to be grinches on September 24, given the opportunity)

      • Ad 1.1.1

        Labour cannot win more than 30% if their sole electoral platform is housing

        They had better figure out the reverse as well:
        National has a really good shot at coalition with NZF if housing is the only big policy issue for the 2017-2020 term.

        They need to outsmart National because at the moment National are tactically eating their lunch.

      • bwaghorn 1.1.2

        probably another gst rise coming if the nats win

  2. Sabine 2

    and an increase in the Accommodation Supplement.

    Landlords all over the country break out in cheers and start increasing their rent demands.

    Cause, why not, the Government provideth.

    • weka 2.1

      But, hey, there will be an extra $20+ a week tax cut for low income people to make up for that 😉 (the ones with jobs, not the dole bludger ones).

      • michelle 2.1.1

        Twenty dollars a week was the amount the gnats took of beneficiaries in the their 1990 mother of all budgets and now they have a bloody cheek to say we are the only party to increase the benefit in 20 years when they have just given back what they took. Pull the other one you tories.

        • indiana 2.1.1.1

          Have all the economic conditions of the 90’s remained the same as well?

        • Geoff 2.1.1.2

          Actually only some beneficiary got a rise and most didnt get a cent and those that did lost part of their accomadation supplement so some in fact only got 5 bucks or less of the 25 bucks rise.Typical nats give with one hand tske with the other.

        • Sacha 2.1.1.3

          Wasn’t it a 20% cut by magnanimous Ruth?
          Imagine the karma.

        • SARAH 2.1.1.4

          In fact it was $27 a week from a total of about $130 so percentage wise and how far each dollar went it was a huge amount and today’s $25 was peanuts compared to it. I remember because I was affected at the time with 3 young children to care for.

      • Sabine 2.1.2

        the tax cut applies to all tax payers , not ‘low income’ people.

        The only difference between the cleaner at the hospital and Mike from TV3 is that the cleaner does not have the income to declare at the highest tax rate. Mike from TV3 however does declare the first $14,000 at 10.5% and will pay 17.5% tax on income $14000 – $48000 tax. So if that threshold increases Mike from TV3 will receive the tax cuts just as everyone else.

        I believe that the first 25.000 should be at a 0% rate. Essentially the cost of renting should be earned tax free. Use the average or median rent as a basis.
        But then i am not the benevolent dictator-ess.

        • AsleepWhileWalking 2.1.2.1

          AS + all other rental subsidies needs to be completely cut. Continuing to pay it only feeds an insatiable beast.

  3. dukeofurl 3

    Would hope that the 10.5% threshold for those family trusts who divert the income to a familys children is closed.

    A person under 15 isnt going to be making independent decisions about using that income- indeed may not be even aware that they are ‘receiving it’

    Its another clever rort on top of the ‘negative gearing’ loophole, often used for investment housing

    • Bearded Git 3.1

      @duke Yes, agreed.

      Under the legislation they are able to take into account assets shifted to trusts when assessing state subsidies for care homes, so why they can’t do this for WFF beats me.

    • Sacha 3.2

      That seems like a great sneaky method for pre-funding your children’s education, home ownership, etc. The depths some scumbags will sink to.

  4. Muttonbird 4

    More leaks/announcements lurching further and further to the left.

    The Government looks terrified.

  5. saveNZ 5

    It’s a good move. But like any thing with the Natz will probably be fake, help the rich the most and start at 2021.

    Labour need to have a ‘killer’ policy. I like the UBI as a referendum but does not sound like they going in that direction.

    Inspite of Labour making zero headway in the polls about housing they still think it will float them rather than sink them. Personally think it could go either way, so it’s not a policy to depend on. Also apart form state house sell offs, Labour’s housing simplistically sounds like the natz policy of getting public and private practise in to solve things, so not a differentiator.

    Helen Clark, always came with a killer policy. 0% student loans, working for families, kiwisaver etc

    Labour talk too much about taxing and not enough about overall society (vision) and give an incentive like Helen Clark used to do to the middle class.

    They could think about a savings incentive (but not complicated!), like ISA (https://www.gov.uk/individual-savings-accounts/overview) – would help the elderly, small business, people saving for a house, people who need to have a short term savings to draw on in case of crisis.

    Also there is a lot of worry about the sad state of NZ environment, water quality etc.

    I’d like to see a lot more done for insecure work as well. People just get fired/made redundant anytime and that’s that.

    But actually moving the tax brackets at the lower end is not a bad idea for the poor if it is real.

  6. Steve Reeves 6

    I fail to see why moving the brackets “concentrates” the benefits on those with lower incomes, because everyone benefits whatever their income…so the effect is not concentrated anywhere.

    Maybe increasing the lower brackets as suggested here AND lowering the higher one might make the claims to be doing good especially for those on lower incomes more believable.

    • beatie 6.1

      It would be very helpful to low income workers with more than one job if secondary tax was abolished.

      • Sacha 6.1.1

        Yep. Already flagged as possible once IRD’s current >$1b systems redevelopment project allows. Saw something in media a few months back flagging that. Unsurprised if Nats float it to snag some of the jandal-wielding overnight cleaner vote.

      • Draco T Bastard 6.1.2

        Secondary tax only applies if you don’t fill in a tax return.

      • saveNZ 6.1.3

        +1 – yep get rid of it. Why is secondary tax still here in the age of the Gig economy!!!!

  7. Ad 7

    I reckon Joyce is ready to say something like:

    – Everyone with a child who’s working: extra $50 per week

    – Everyone earning under $48k: extra $50 per week

    I think it will be that big.

    These guys are headed straight for Labour heartland vote.

    • Sabine 7.1

      it would have to and it should as i know people who have been given a $50 rent increase last year and the year before.
      And how long can they absorb these increases?
      how much more Accommodation benefit would you want to throw at people in that scenario before they must give up living where they live and move elsewhere to start the same cycle there?

    • dv 7.2

      Sorta like North of $80 eh Ad

    • saveNZ 7.3

      They should beat the Natz by copying their policy like the Natz try to mimic Labour policy.

    • Wayne 7.4

      Ad

      Actually National is really aiming to hold on to the existing National vote, which after all is 47%. A lot of top end of that vote is pretty soft, and only votes National because of three things, probably in some sort of combination.

      One, National looks (and is) competent on the economy and has been so for years,
      Two, National is sufficiently fair to lower income New Zealanders without knocking out incentive and opportunity,
      Three, the alternative package of parties looks like a risky bet.

      I appreciate you won’t agree with this, but National is not trying to get your vote. They are wanting to hold on to the vote they got in 2011 and 2014 when they hit 47%.

      • “National is sufficiently fair to lower income New Zealanders”

        I wonder, Wayne, can you feel how this is revealing of a paucity?

        • Wayne 7.4.1.1

          Robert,

          the same could be said of the Labour, Green MOU. It reflects that likely persuadable voters were not interested in tax increases and liked government sort of the size that is.

          While Labour will clearly spend more on lower income New Zealanders than National will, the MOU is a big constraint on how far that Labour can go. It can only be sufficient as opposed to more than sufficient.

      • Draco T Bastard 7.4.2

        One, National looks (and is) competent on the economy and has been so for years,

        National has always been a bad economic manager and always will be. That’s why it’s always taken a socialist government to fix the fuckups that they make.

        Two, National is sufficiently fair to lower income New Zealanders without knocking out incentive and opportunity,

        No it’s not. In fact, it always fucks over the lower income earners to boost profits for the rich.

        Three, the alternative package of parties looks like a risky bet.

        Having a dictatorship of a single party is far worse.

  8. Keith 8

    Increase in the dole for housing investors aka housing suppliment rise. Such generosity with taxpayer money to the well off is galling. Of course all that will mean is investors can raise rents by that much meaning they’re better off and the tenant and taxpayer is nowhere.

    Honestly this bullshit coming from Joyce, and it will be because he and his government have a solid track history of misleading announcements, should be quickly and carefully analysed, pulled apart and thrown back at them

    What NZ cannot afford is another tax cut, especially since the current ” surplus” is thanks to frozen public spending and financially stressed government departments as it is.

  9. Draco T Bastard 9

    POLITIK has been told that added together the tax threshold and Working for Families moves could mean families where one parent is in work with two children see their income rise by what is being described as a “significant” weekly figure.

    So, that would be more than fifty cents per week then?

    POLITIK understands that by concentrating the cuts on the lower tax thresholds, the increase per person will be significantly higher than $20 a week for those lower income earners. …

    Chances are that only those people in the middle and upper bands of the tax bracket will see that much. For the lower band you’d pretty much have to drop the tax rate to 0%

    And here’s the thing. Even if they do drop the taxes on the lower bands all that will happen is that prices will increase to grab it all for the rich. In other words, expect a once off spike in inflation that will be smoothed out by the averages that actually get reported.

    Tax cuts for the lowest paid just go straight to the rich.

    • Wayne 9.1

      Draco,

      There is zero evidence that tax cuts boost inflation. Instead they boost consumption, which is why they work.

      • Consumption. Yes, that’s the way! Boost consumption. This is sterling stuff!

      • Grafton Gully 9.1.2

        The Judaeo-Christian tradition, in which you are embedded, warns against the greed in boosted consumption and teaches that possessions do not make a life.

        “Take heed and beware of covetousness, for a man’s life consisteth not in the abundance of the things which he possesseth.”

        https://www.biblegateway.com/passage/?search=Luke 12:14-16&version=KJ21

      • One Anonymous Bloke 9.1.3

        they work.

        [citation needed]

        NB: Lab5 raised taxes in 1999. The economy came out of National’s stultification (cf: Double Dipton’s first double dip recession). So we know tax increases work.

        • Draco T Bastard 9.1.3.1

          Therefore higher wages and benefits also have an inflationary effect, and as Cullen showed, lead to more successful business activity too.

          For a short time. Basically, until all the wealth is in the hands of the few.

          As The Great Depression and The Great Recession and every other recession throughout history has proved.

          After all, I don’t recall rampant inflation during Lab5.

          It was under Lab 5 that the housing bubble started. John Key was right about that back when he called it out.

          • One Anonymous Bloke 9.1.3.1.1

            The point is that according to you, cutting taxes causes inflation, and raising taxes causes inflation. I suspect your economic model might be missing some parts.

            • Draco T Bastard 9.1.3.1.1.1

              No, that’s not what I said. I suggest you go back and re-read it.

              • One Anonymous Bloke

                You said (below) “a tax cut will result in higher prices”, because of “people having more money”

                But people having more money is also a consequence of the extra government spending that comes from tax increases.

                What am I missing?

                • Draco T Bastard

                  The point that I said that if be a once off spike of inflation targeted at the poor.

      • Draco T Bastard 9.1.4

        And what happens in a market system when consumption goes up?

        Oh, that’s right, prices go up.

        Oh, and then there’s that other bit about prices being as high as the market will support which means that people having more money means that the market can support higher prices and thus higher profits.

        So, given these two truths we can assume that a tax cut will result in higher prices and that those higher prices will result in higher profits for the owners of businesses.

        That’s the market for you and how it works.

        If tax cuts actually worked as you believe then we’d all be better of since the 1980s but we have higher poverty and decreasing government services.

      • millsy 9.1.5

        Tax cuts always result in the decrease of funding of government services.

        The mass closure of hospitals in the 1990s to pay for Bill Birch’s tax cuts is an example.

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