Tax Cuts Come Into Effect

September 30, 2008 New Zealand Taxation  No comments

From the 1st of October, individual tax level faced by New Zealanders will be lowered.

This is the first of the three tax cuts put forward by Finance Minister Michael Cullen. The effect of this will be most felt with those in the $38,001 – 40,000 taxable income bracket, with a drop from a tax rate of 33% to 21%. Earners in the $14,001 – 38,000 bracket will see no change, while $9,501 – 14,000 will see a drop of 8.5% to a level of 12.5%. Lastly, earners between $0 and 9,500 will see a drop of drop to 12.5% from its previous 15%. There are no changes at levels above $40,000 annual taxable income.

This tax change is accompanied by a raise in superannuation pay and favorable changes to the Working For Families tax credit. The second and third round of tax cuts are scheduled to take place in 2010 and subsequently in 2011.

Political analysts expect the National Party to release their counter-plan to the tax cuts as early as next week. It is expected that this event and the planned tax cuts will be an important if not pivotal argument of the upcoming campaigns for the November 8th national elections.