Budget 2024 Delivers Overdue Tax Relief to 3.5 Million Kiwis: Nicola Willis

The tax relief, aligned with the National Party's 2023 tax plan, aims to ease the burden on average income households and eligible families starting from 31 July this year.

Budget 2024 brings much-needed tax relief to 3.5 million New Zealanders, allowing them to keep more of their earnings, Finance Minister Nicola Willis announced. The tax relief, aligned with the National Party's 2023 tax plan, aims to ease the burden on average income households and eligible families starting from 31 July this year.

Key Benefits

Average Income Households: Receive up to $102 a fortnight in tax relief.

FamilyBoost Childcare Payment: Eligible families can receive up to $150 per fortnight.

Households with Children: Benefit by an average of $78 per fortnight ($2,028 a year).

Working-Age New Zealanders: Benefit by an average of $32 per fortnight ($832 a year).

Fiscal Strategy

The annual cost of the tax package is $3.7 billion, fully funded through specified savings and revenue initiatives, ensuring the package is fiscally neutral and will not add to inflationary pressure.

Targeted Relief

"On 31 July this year, New Zealanders will experience tax relief for the first time in 14 years. This relief is well overdue and will help hardworking Kiwis who have endured a prolonged cost of living crisis," Finance Minister Nicola Willis said.

The Government's tax package focuses on low and middle-income households, particularly benefiting families with young children. The plan includes raising income tax thresholds to account for wage growth, expanding eligibility for the independent earner tax credit, introducing the FamilyBoost childcare payment, and increasing the in-work tax credit for low to middle-income working families.

Specific Increases

Income Tax Thresholds: Adjusted to compensate for wage growth.

Independent Earner Tax Credit: Expanded eligibility.

In-Work Tax Credit and FamilyBoost: Tilt benefits towards low-to-middle income working families with children.

"A single person earning $55,000 a year will be better off by about $51 a fortnight," Willis noted, highlighting the tangible benefits of the tax changes.

Fully Funded Package

The tax package, averaging $3.7 billion annually, is fully funded through offsetting savings and revenue initiatives. This approach means tax relief will not require additional borrowing and will not contribute to inflationary pressures.

Coalition Agreements

The design of the tax plan aligns with the National Party tax plan with adjustments to reflect coalition agreements. The Government will not progress the foreign buyers' tax, as agreed in the National-NZ First agreement. Instead, increased funding for IRD tax audits and oversight work will generate extra revenue and ensure greater fairness and integrity in the tax system. The agreement to stop the first-year "Fees Free" and replace it with final-year "Fees Free" has also contributed to additional savings.

Future Considerations

The idea of flattening the tax scale, discussed with ACT leader David Seymour, remains on the table for future consideration, although it was not possible to implement it in a way that benefitted people as effectively as the current plan.

Supporting Families and Fairness

"Budget 2024 supports families to deal with rising costs and makes our tax system fairer," Willis concluded. The measures introduced in this Budget are intended to provide immediate relief to New Zealanders and set the foundation for a more equitable tax system.