The only good news? The company tax rate drops to 30%, costing around $500 million a year, and there's a derisory 15% tax credit for (narrowly defined) research and development.
That's it. What's left?
- "Chewing gum" tax cuts: Cancelled.
- A new "payroll tax" on employers through the all but compulsory Kiwisaver (the derisory tax credits are not inflation indexed so over time as people earn more, notes David Farrar, employers will end up with more and more of the bill).
- A $6 billion surplus, and even more petrol taxes! Up to ten cents a litre to pay for roads, and for public transport that people don't use (a sop to keep the Greens in line).
At the end of the day, as David Farrar notes, "14% of taxpayers will now be paying the 39% tax rate, up from 5% in 2000. And those 14% will pay 53% of all income tax... The surplus for this year is projected to be $6.3 billion and over the next four years after that a total of $22.7 billion. And not one cent of it coming back to those who pay it. Tax revenue is projected to increase from $52.2 billion this year to $62.0 billion in 2010/11."
Where's the door?
UPDATE 1: NBR has the details, without all the spin.
And it's worth pointing out, to all those to whom it isn't immediately obvious, that it's not governments who make us wealthy, but it is governments who make us poor.
UPDATE 2: Labour Party hack Jordan Carter, naturally, has the spin, and spun as ineptly as always -- which makes it more transparent. Here, he says, are "the key point about today's Budget":
massive support for individual savings, to increase savings, generate deeper and more liquid capital markets (and reduce the budget surplus in a non-inflationary way), and a raft of measures (including company tax cuts, R&D research credits and infrastructure investment) to make the economy more productive over time.Clearly he's got no more idea than Michael Cullen does about either capital markets, inflation, what makes the economy more productive over time, or what a real tax credit looks like; no idea at all how real savings -- not virtually compulsory savings for poor people over which they have no control -- a regulation bureaucratic nightmare for employers -- how real savings are the key to genuine productivity.
UPDATE 3: Craig D. puts it perfectly in a comment made at Pacific Empire:
Everything Labour does makes me despair for the future.They absolutely hate the idea of anyone doing something independent of the government.UPDATE 4: From Dave at Big News:
Rather than give tax cuts, they put in place a massive welfare system, recycling tax money back to most middle class families.
Now, instead of giving our money back to make our own decisions, we are to save through another government scheme.
What is Labour’s ultimate vision? Where everyone works for, is paid by, saves with and is dictated to by the government deciding what’s best?
This budget is about encouraging people to save? Ummn.. no its not, it's about taking consumer demand out of the economy so the Government can spend and tax more without affecting inflation.To save, people must do one of two things: spend less or earn more. If you can't do either, it's a bit like asking someone to flush the toilet after using a long drop.