The National-led Government is considering across-the-board personal tax cuts and changes to property tax as part of a tax package that might include a rise in GST from 12.5 per cent to 15 per cent.
If the Government decides to increase GST, Superannuation payments will immediately rise in two separate ways.
1. Superannuitants would get an income tax cut, which would apply both to Superannuation and to any other income they receive, such as interest, dividends, or part-time earnings.
2. On top of this tax cut, Superannuation payments would be increased up front, by just over 2 per cent, to reflect the general rise in prices. The increase in Super payments would be immediate from the day GST went up, without waiting for the usual annual inflation adjustment.
This double-whammy increase means that superannuitants would have their incomes lifted quite significantly, and at a rate that exceeds the increase in prices.
In addition to the two immediate increases, across-the-board tax cuts would lift the after-tax average wage – raising the floor for Superannuation payments, which are linked to 66 per cent of the after-tax average wage. In his speech, the Prime Minister also reiterated that National is committed to maintaining Super payments linked to 66 per cent of the after-tax average wage from age 65.
A copy of the Prime Minister’s speech is enclosed. It is also available online at the link below:
www.beehive.govt.nz/speech/address+north+shore+grey+power.
Getting tough on truants
The Education Minister’s plans to help schools crack down on truancy come as good news for Auckland.
The results of the Ministry of Education’s 2009 truancy survey show that just over 30,000 students are truant from state and state-integrated schools on any given day.
Approximately 10500 of these are from Auckland.
This is not good enough. Evidence shows that regular attendance in school is the biggest factor in student achievement. Chronic truancy can lead to negative outcomes later in life such as violence, substance abuse or unemployment.
National is determined to get tough on truancy. That’s why we have doubled the amount of funding to tackle the problem.
An additional $4 million per year will help schools throughout
New Zealand introduce stronger and more proactive measures to reduce the number of students wagging school.
Initially the funding will go towards extending the use of electronic attendance registers, the Early Notification text message System, and one-off funding of $1.5 million to reduce the time it takes to get students absent for 20 consecutive days back into school.
A small amount has also been set aside to help schools prosecute parents of children who are persistently absent from school without justification.
The National-led Government is working on a long-term approach, aimed at keeping more children engaged at school, rather than having to get truants back into the system once they have become disengaged.
The 2009 truancy survey can be found at: http://www.educationcounts.govt.nz/publications/series/2503/71220
Property tax reform
The Government will be introducing measures in the Budget to reform the tax system that will include changes to the taxation of property, alongside personal tax cuts.
We agree with the Tax Working Group that there is a gap in the taxation of property investments where income is being derived but, in aggregate, no tax is being paid.
To illustrate this: In the March 2008 tax year rental property was worth $200 billion – four times the size of the share market – but generated tax revenue losses to the Government of $150 million.
Some of the property options discussed by the Tax Working Group are not favoured by the Government and will not be progressed.
In particular, we will not be developing any proposals for a land tax, a comprehensive capital gains tax, or a risk-free return method (RFRM) for taxing residential investment properties.
A range of options remain on the table, which we are seeking advice on. Decisions are yet to be made, so you won’t see the detail of those until the Budget on May 20.
Fresh Start law urgently needed
A report into the effectiveness of Youth Court supervision orders on re-offending shows National’s Fresh Start legislation is urgently needed. The report makes it clear, longer sentences and greater supervision is needed if we’re to make a lasting impact on the behaviour of youth offenders.
Our Fresh Start initiative provides more tools to deal with youth offending including:
· More power for Youth Courts to issue new orders that address parenting education, mentoring, and drug and alcohol treatment.
· Longer sentences for the worst offenders including longer supervision with activity and supervision with residence orders.
· Empowering the Youth Court to deal with a small number of 12 and 13 year olds charged with serious offences.
The legislation will become law in the near future.
More information:
http://www.beehive.govt.nz/release/report+shows+fresh+start+legislation+needed
MMP Referendum and Electoral Finance Reform
Two questions will be put to voters in the referendum on Mixed Member Proportional Representation (MMP) to be held in conjunction with the 2011 general election. The proposed questions are: firstly, whether voters wish to retain MMP, and secondly, what alternative voting system they would prefer from a list of four options.
The referendum is yet another example of National delivering on its election promises.
Legislation enabling the referendum is expected to be introduced to Parliament in April and a select committee will hear public submissions.
Electoral finance laws will be reformed in a package announced by the Government. The package comes after extended consultation with all parliamentary parties and the public.
In the coming months, National will introduce legislation implementing these decisions, and we expect the new rules to be in place before the 2011 general election.
More information on MMP: http://www.beehive.govt.nz/release/format+mmp+referendum+takes+shape
More information on electoral finance reform:
http://www.beehive.govt.nz/release/electoral+finance+reform+package+announced
Capital Market Development Taskforce Report
National wants capital markets that are fair and efficient.
They are key to improving the financial wellbeing of all New Zealanders and a vital source of finance for business.
In December, the Capital Market Development Taskforce made 60 recommendations as part of a blueprint for the development of capital markets. This week the Government released its action plan for dealing with the report.
We need to rebuild mum and dad investor trust in capital markets. We want everyday investors to feel more confident about putting their savings into capital markets, through understanding the basics of investment, getting advice they can trust, and making informed choices.
National is committed to implementing some of the taskforce recommendations, which will build on changes that we already have in train to improve the operations of our financial markets.
The taskforce identified flaws in our market and where there are opportunities for improvement, and we need to act quickly to fix them.
