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|Income|| Tax Cut || Extra GST || Total change |
|$80,000|| $50.58 ||$23.33||+27.25|
|$120,000|| $89.04 ||$32.96||+56.08|
Finance Minister Bill English giveth in tax cuts then taketh away with GST increases in today's budget, on balance putting more in the pockets of all but the most extravagant spenders.
His giving side saw across the board tax cuts from October 1, amounting to $16.15 a week for someone on $30,000, to $89.04 for a person earning $120,000.
With tax cuts estimated to cost $14.3 billion over four years, Mr English opted to claw back revenue of $2.2b for that period by increasing gst to 15 percent, from 12.5 percent.
Also timed for October 1, that would increase the expenses of most households by just above 2 percent, leaving a person on $30,000 paying an estimated $9.87 more a week in GST, and someone on $120,000 handing over an additional $32.96.
When the tax-GST seesaw stopped rocking, most would be better off, Mr English figured -- at $30,000 it would be $6.28 a week, rising to $56.08 at $120,000, even with high earners likely to be paying more GST than the less well off.
National did not tinker with personal tax thresholds, simply cutting the rates across all of them:
* tax from $0-$14,000 will drop from 12.5 percent to 10.5 percent;
* $14,001-$48,000, 21 percent to 17.5 percent;
* $48,001-$70,000, 33 percent to 30 percent;
* Over $70,000, 38 percent to 33 percent.
Superannuation, Working for Families and benefit payments would increase, and tax on bank interest would be cut.
The budget intended to reward effort, attract and retain skilled workers, encourage savings, and provide a fairer tax system, Mr English said.
Those on the top rate, such as many teachers, nurses and police would no longer pay higher rates than wealthy individuals who could structure their affairs to ease their tax burden, he said.