The Budget has come and gone without much fuss and if you had kept a close eye on “Stuff” recently, you would have been able to forecast broadly what was going to happen.
Good to see health (16.2 billion) and education (13.5 billion) coming out on top, because that’s where we need to spend our money – looking after ourselves and investing in the future. Not so good if you are a smoker though, with increases of 10% pa over the next four years.
Probably would have expected to have seen a bit of tinkering with the tax system with the general election due next year – mind you, nothing like a promise of reduced tax closer to the election and the changes on provisional tax changes, while good in concept, may cause some pain working through in the interim.
IRD have not missed out, scoring a spend of $857 million, with the payback coming in additional revenues collected through savings – $284 million and $280 million in additional tax revenue – ouch that is going to hurt and in particular, closer observation of the taxation of our small to medium size companies.
So where is the money coming from in relation to budget increases – bit of a lottery – lower spending allowances, improved economic outlook and higher tax revenue (higher tax forecasted from sale of tobacco products).
In summary, “steady as she goes” with a tainting towards caution with one of the positives being Governments intention to pay down debt quicker, we can all relate to that in terms of interest savings. With little spending, what’s the bet the Reserve Bank will reduce interest rates further to stimulate spending in the economy, although not a message seemingly taken on by the Government.