Geof Nightingale, a tax partner at PwC, doesn’t expect tax cuts to happen until 2017. Photo / Sarah Ivey
Geof Nightingale, a tax partner at PwC, doesn’t expect tax cuts to happen until 2017. Photo / Sarah Ivey
Finance Minister expected to allocate millions to health and education in spending plan.
When Finance Minister Bill English stands up on Thursday to announce his spending plans for the next year there will be millions allocated to health and education.
But experts say there could also be something in the Budget to help your pocket.
Tax cuts?
Geof Nightingale, a tax partner atPwC, expects there to be some forecasting of future tax cuts but it's likely they won't come in until 2017.
"I think there will be some forecasting of tax cuts. He [Bill English] has been pretty clear on that."
Nightingale said any promises would be subject to certain economic and fiscal conditions being met and probably would not be significant.
"I expect they won't be material changes."
Nightingale suspects they are more likely to be income bracket increases allowing people to earn more before they pay a higher rate of tax.
The changes would be designed to allow for inflation so while people would potentially get more in their hand it may not buy more once inflation is taken into account.
The more immediate pocket helper in this year's Budget will be cuts to ACC levies, a move already well-signalled by the Government.
From July 1 the ACC portion of vehicle licensing, or what is commonly known as your car's rego, will drop on average by 41 per cent depending on your type of vehicle.
Petrol costs will also fall with the ACC take on petrol dropping by 3c a litre from 9.9c to 6.9c. Workers will also benefit with ACC taking a smaller amount of their pay to cover its levies.
KiwiSaver changes unlikely
Many of the changes announced in Budgets don't come in until the following year.
This year that includes KiwiSaver changes to help first-home buyers, including the introduction of the HomeStart grant which came in on April 1, giving a higher subsidy to those who build a new home and meet income and house price conditions.
Nightingale doesn't expect there will be any more changes to KiwiSaver in this year's Budget despite ongoing political pressure on the Government over housing affordability.
The ACC portion of car regos will drop by up to 41%. Photo / NZME.
"I'm in the camp where I believe the housing issue is a supply issue. The way to get more first-home buyers into the market is to increase supply. I don't believe tax changes are the answer."
Nightingale said he expected most of the Government's plans to focus on the supply side through changes to the Resource Management Act and more work on Special Housing Areas.
Massey University KiwiSaver expert Claire Matthews said she would not like to see any more changes to KiwiSaver.
"The Government ... needs to leave KiwiSaver alone as continual changes are unsettling for the New Zealand public and raise concerns about the long-term future of KiwiSaver which is damaging for the scheme," Matthews said.
Matthews would also like to see a commitment to review the age of entitlement for New Zealand Superannuation.
"I think it needs to increase, but at present we can't even have a conversation about it and I think the Government should at least be opening the door to enable the conversation to occur."
But as Prime Minister John Key has ruled out raising the age of entitlement on his watch, it is also an unlikely contender for this year's Budget.
One proposal that has been signalled in the past is the auto-enrolment of all workers aged over 18 into KiwiSaver.
Bruce Kerr, executive director at Workplace Savings, an industry body for superannuation providers, said auto-enrolment was still on the radar for the Government but there didn't appear to be any rush towards making it happen.
