Give us a (tax) break! New Zealand tax cuts planned for 2008

The New Guy full After keeping his cards very close to his chest, Finance Minister Michael Cullen has confirmed that there will be tax cuts announced in the 2008 budget.

Low surplus won’t hold tax cuts back
Despite a lower than expected Government surplus (for the six months leading up to December 2007, our NZ$815 million operating surplus was NZ$1.7 billion lower than projected), Cullen has said planned tax cuts will go ahead. Surplus figures have been affected by the current volatility of financial markets worldwide – mainly investment losses recorded by the New Zealand Super Fund and other Crown entities.

So, what can we expect in the way of changes to tax in New Zealand?
The tight-lipped one remains cagey on this matter, saying only that he is awaiting further information on tax revenue, spending forecasts and inflation for 2008. As many commentators have noted, tax cuts will not increase our wealth in any real terms; to create a stronger economy and greater wealth for Kiwis, we need increased productivity. This can be achieved through greater investment in research and development, product development, high value technology products, and sectors such tourism. While tax cuts won’t solve our economic woes (house prices, inflation and rising interest rates) or do anything to raise our wage and salary level, they’re obviously pleasing to the minds (and wallets) of New Zealanders.

Stay tuned for more updates on Labour Government’s tax cut policy…

Image from Flickr.