Today is the fourth instalment in our blogs regarding the tax changes proposed by the Labour Government. Today we are looking at income and corporate taxes.
Overall, the Labour government is not proposing any changes to the current GST, corporate or marginal income tax rates and will reverse the tax cuts proposed by the National Government earlier in the year.
This effectively means that the current GST rate of 15%, company tax rate of 28% and the current individual marginal tax rates will remain the same for the foreseeable future.
Earlier in the year, the National Government had proposed tax cuts for personal income tax payers. These came in the form of increasing the first two marginal tax brackets so that effectively more of an individual’s income was taxed at a lower rate. This would have resulted in a maximum individual saving of $1,060 (if $70,000 was earnt) in a financial year. However, the proposed removal of the independent earner tax credit (IETC) would have offset this saving in some instances.
Instead of the tax cuts proposed by National, Labour intend to reinvest the $2 billion that the tax cut would have cost and invest it in “families and core public services – such as health, education and police”.
As always, we will update you as more information comes to hand.