By Peter Wilson of NZPA
Wellington, May 21 NZPA - Parliament is on track to pass legislation today that will enact the biggest tax system shake up in a quarter of a century.
The Government is rebalancing the economy by shifting it away from spending and into saving and investment.
Across the board tax cuts will put more money into people's pockets and, the Government hopes, into their savings accounts.
A GST increase from 12.5 percent to 15 percent is designed to curb spending and claw back some of the lost revenue.
Loopholes used by wealthy people to hide their money are being closed and new liabilities are being imposed on property owners and speculators which will bring in billions more over the next few years.
Although yesterday's budget has had a generally good reception the bill that puts its provisions into law isn't getting an easy ride in Parliament.
Labour is vowing to fight it "all the way to the ballot box" and is putting up fierce resistance as it goes through Parliament under urgency.
Labour leader Phil Goff is calling the budget "the big tax swindle" and says with inflation running at 6 percent -- a consequence of the tax cuts -- the miserly cuts for low and middle income people will be wiped out.
As the Government promises an average family will be at least $25 a week better off, Labour says it will be $30 worse off.
"This budget of broken promises, borrow and hope and rampaging inflation, also contains service cuts which will hit families hard," Mr Goff said last night.
"A huge cut to early childhood education funding means parents with young children will have to find extra each week and the $1.2 billion hole in health spending over four years will hit the elderly and the sick hard."
The new tax tables in the budget, due to become law when the bill is passed, show a person on the average income of $50,000 a year will get a tax cut worth $29.42 a week. When GST at 15 percent is factored in, the net gain is $13.71.
The gains are smaller for income below $50,000 but, according to the figures, no one will be worse off.
On income above $50,000 the gains increase, and a person earning $120,000 a year will get a tax cut of $89 dollars with a net gain of $56.
Labour is using the table to say it is a budget for the rich, arguing that they will be the only ones with anything left after inflation pushes prices up.
The tax cuts and the increase in GST come in on October 1, and one of the surprises in the budget was that company tax will come down from 30 percent to 28 percent in April next year.
Prime Minister John Key says the package will boost economic growth by 1 percent, and he has brought the business sector on board.