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New Zealand's Individual Tax Cuts Axed

by Mary Swire,, Hong Kong

23 October 2017

A plan to hike individual income tax thresholds from April 2018 is dead in the water after the National Party failed to win the recent New Zealand elections.

National had proposed that from April 1, 2018, the lowest tax bracket, under which a 10.5 percent tax rate applies to income up to NZD14,000 (USD9,871), would be increased to NZD22,000. The next tax bracket, which features a 17.5 percent rate, would also be hiked, from NZD48,000 to NZD52,000.

On October 20, Labour announced that it had secured the backing of the New Zealand First Party, enabling it to form a minority coalition government also with the Green Party.

Labour previously said that it would ditch National's scheduled tax cuts if elected.

Ahead of the election, Labour had also proposed a tax on the sale of a property within five years of its purchase, to discourage property speculation.

It said it would end secondary taxation, which provides for the taxation of a second source of personal income at a fixed rate, rather than under the progressive individual income tax regime.

Labour had also proposed changes to make tax payments easier for businesses by allowing them to pay in regular installments at a rate they can adjust. It previously said that the current system of businesses having to estimate their annual income and paying tax in three large installments throughout the year can leave companies "with a big bill at the end of the year which can push a small business to the wall." The party said that it would scrap late penalties for provisional tax and raise the level at which provisional tax kicks in.

Labour said that it would not make any changes to personal income tax, corporate tax rate, or goods and services tax.

However, in brokering a coalition, Labour's tax plans may be tweaked.

TAGS: tax | small business | business | value added tax (VAT) | property tax | law | legislation | New Zealand | tax reform | individual income tax

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