Student Allowance System Critisized

May 30, 2012 New Zealand Taxation

On May 28th President of the New Zealand Union of Students’ Associations Pete Hodkinson issued a statement, claiming that the current National-led government is reducing its support of students in New Zealand ” … so it can pay for its tax cuts for the rich”.

According to Pete Hodkinson the government has shifted its focus away from students and towards high earning individuals, and the move is short sighted and will prove to be harmful to New Zealand.

The government has abducted that over the next year, the parental income threshold for student allowances would be frozen, and the student loan repayment threshold will be held at NZD 19 084 until 2015.

Pete Hodkinson claims that leaving the threshold at its current level will mean that an extra 1 500 New Zealand students will no longer be eligible to receive student allowances. He added that the current student allowance system also means that families may face very high marginal tax rates.

Explaining, Pete Hodkinson said that student allowances are reduced at 25 cents per dollar for every dollar that the parents of a student earn over the NZD 55 000 threshold, and the reduction effectively means that families will see a marginal tax rate of 55 percent. He went on to say that families with two children who are studying will face a rate of 80 percent once they earn above NZD 62 000.

Commenting ont eh significance of the threshold, Pete Hodkinson claimed that “…the inevitable consequence of not lifting the repayment threshold is a tighter squeeze on those that can afford it the least. And frankly that’s just wrong.”

Photo by publik16

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