There is a strong case for adjusting tax brackets and cutting income tax in Thursday’s Budget, business lobby group BusinessNZ argues.
Chief executive Kirk Hope listed cutting company tax first in a pre-Budget wish-list published on Friday.
But he said reducing personal tax and loosening tax thresholds would also be positive.
The case for adjusting tax brackets was strong, Hope said. …
He said one option was to:
– make the 10.5 per cent rate for incomes up to $14,000 apply to incomes up to $20,000
– raise the top end of the income band for the 17.5 per cent tax rate from $48,000 to $64,000
– apply the 30 per cent rate to income up to $80,000, instead of $70,000
The approximate cost of each would be $960 million, $2 billion and $100 million. So around the $3 billion the Government used to talk about.
Someone earning $80,000 would benefit from each change by $420, $2,000 and $300 so $2,720 all up which would be an extra $55 approximately take home pay.
Hope said that while cutting income tax would help small businesses, reducing the company tax rate of 28 per cent was a “key need”.
“It’s important for international competitiveness to keep the New Zealand business tax rate below that of key trading partners.
“Australia is currently reducing its business rate from 30 to 25 per cent while the US is moving to a 15 per cent federal business rate,” Hope said, referring to a one-page tax proposal released last month by President Trump.
A drop from 28% to 25% would cost around $720 million a year,