Labour takes tax off the table

For immediate release
Labour takes tax off the table

“In announcing $10.6 billion committed to tax cuts over four years, Dr Cullen may have done enough to take tax off the table as a key election issue” says Alan Judge, Tax Director at Ernst & Young.

“While the increase in take-home pay is only modest from 1 October this year, by the end of the tax cut programme it is significant at all income levels. Whether there is any real benefit to households is now dependent on keeping inflation under control so that the proposed tax cuts are not diluted through increased energy, fuel and food costs.”

“Taxpayers still paying tax at 39% would have been hoping for more from this budget but they were never likely to get much from a Labour government that continues to spend heavily in the critical areas of health and education but also on a large range of other initiatives. Any taxpayers on the top rate that are net savers still have the ability to access a 30% tax rate through the PIE prescribed investor tax rates.

“There is no question that National will need to offer more to taxpayers in the run up to the election but the debate will be more about the quality of government spending rather than tax cuts even though the two are linked.

“The myriad of announcements around simplifying tax compliance are sensible but not startling. Most of the changes are likely to drive productivity gains rather than deliver additional cash to small and medium sized business. Business owners will have more time to devote to their business than dealing with tax compliance.

“Changes to the international tax regime will be welcomed by all exporters. The retention of Australia as a "grey list" country shows the government listened to business during the extensive consultation period. Exporters to Australia will no longer have to worry about the compliance costs of proving their business qualifies as "active" and will not pay New Zealand tax on the earnings of Australian subsidiaries. In effect the status quo has been retained.

ENDS

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 130,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve potential.

For more information, please visit www.ey.com

© Scoop Media