Listen first to yesterday’s podcast, What is the Budget?
There were only a few surprises in today’s Budget. One was about tax cuts. All workers, the rich and the poor, will pay less income tax. People earning less than $14,000 a year will pay 10.5% income tax from Oct 1st instead of 12.5% which they now pay. Tax on incomes from $14,000 to $48,000 will reduce from 21% to 17.5%. This includes about three quarters of all New Zealand workers. Tax on incomes from $48,000 to $70,000 will reduce from 33% to 30% and people earning more than $70,000 will pay 33% from Oct 1st instead of 38%. People on benefits will receive an increase of 2%.
However, GST will increase to 15% from Oct 1st. The Minister of Finance says that because of the tax cuts we will be better off. The extra income will be more than the extra GST we will pay. Also, people on high incomes spend more so they pay more GST.
People who invest in property will not be able to claim a loss of income so easily. It is possible that many rental properties will now be sold instead which could bring down house prices. It is also possible that people will invest in business instead of property.
Company tax will decrease from 30% to 28%. The government hopes that this will help business.
Early childhood centres which have more than 80% qualified staff will lose their extra funding. This means that all centres will receive the same funding even if the teachers are not trained. Parents may have to pay if they want their children to have qualified teachers.
The Prime Minister says that the Budget is trying to do three things: help families, encourage New Zealanders to stay here instead of moving to Australia, and encourage savings.
Questions to think about
How important is it to have trained teachers in early childhood centres? Many people will say that mothers have no training.
Do you think we should have GST on fruit and vegetables?
Why are savings important to the economy?
Numbers to listen for:
Can you catch all the figures about incomes and tax? Listen again.