From a tax perspective, the 2016 Budget speech was a bit of a non-event. Coming hot on the heels of the welcome SME changes announced a few weeks ago, it felt like a bit of an anti-climax. The opposition parties have unanimously labelled the 2016 Budget as “boring”, but John Key prefers “solid and dependable”.
The key messages that were pushed home are that New Zealand’s economy is on the up and the Government is patting themselves on the back for what looks like a surplus for the second year in a row. The aim for this budget was to “provide New Zealanders with skills for a modern economy and to boost regional economies”.
Whilst there may not have been many new tax policies announced, there were some generous investments in other industries, including science and innovation.
The Budget was split into:
- $761m investment in innovation NZ
- $2.1b for Public Infrastructure
- $652m on Social Investment
- $2.2m for the Health Sector
IRD were given $503 million of new operating funding and $354 million of capital funding over the next four years to deliver their new tax administration system, with forecasts that the new system will generate $284 million of savings and $280 million in additional tax revenue from greater compliance. This was on top of the $187m SME tax package announced in April.
The focus going forward appears to be on paying down Government debt with the aim to bring it down to 20% of GDP by 2020. The Government are also predicting an ambitious surplus of $2.5bn by the 2017/2018 year.
With an election coming up next year, tax cuts would clearly be a popular announcement, so we will wait and see whether National are keeping anything exciting up their sleeves to tempt voters.