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Tax Cuts Will Deliver `Shot In The Arm' For Economy - Ministers

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Fuseworks Media
Fuseworks Media
Bill English
Bill English

Wellington, March 29 NZPA - Tax cuts that come in on Wednesday will deliver a billion dollar a year boost to the economy while changes to the business tax regime will help companies get through the recession, ministers said today.

April 1 is the date for personal tax cuts that will increase the income of a worker on the average wage of $48,500 by $18 a week.

A range of changes making it simpler and less expensive for small and medium-sized business, passed by Parliament last week, also take effect on that date.

"These changes form a central part of the Government's Jobs and Growth plan and will provide a shot in the arm for our economy at a vital time," Finance Minister Bill English said.

"The tax cuts we have delivered will stimulate the economy in the short term by putting cash people's pockets, and in the longer term by encouraging people to invest in their own skills to earn and keep more money."

Revenue Minister Peter Dunne said the income tax cuts took New Zealand one step closer to a 30/30/30 percent alignment of the top personal, company and trustee tax rates.

"That is something I have long advocated and I'm pleased it is now a medium-term government priority," he said.

"In regard to small and medium-sized businesses, the tax assistance initiatives will make it easier for them to manage their cash flows and meet their tax obligations during tough economic times."

For earners, the changes mean tax rate cuts and threshold changes, as well as a new Independent Earner Tax Credit which will give an extra $10 a week to those earning between $24,000 and $44,000 a year who do not receive a benefit, Working for Families tax credits or national superannuation.

The ministers said nearly every business would benefit in some way from the changes, which allow companies to keep their money longer, reduce the interest they pay on underpaid tax and cut compliance costs.

There are also changes to KiwiSaver from April 1. The minimum level of contributions will drop from 4 percent of a worker's pay to 2 percent.

The employer tax credit and $40-a-year member fee subsidy will also cease.

NZPA PAR pw mgr

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